France has passed a controversial tax on "digital services" affecting US technology giants because the United States says they will investigate the plan.
Based on the bill, just adopted by the French Senate, tech companies with more than € 750 million in worldwide income and € 25 million in French income must pay a 3 percent tax on the total annual income from service to French users. The switch will affect major players such as Google, Facebook and Amazon, and is made as plans for EU-wide tax changes seemed to stop.
Even before the bill was passed, the United States said it started an investigation into the legislation. In a statement on Wednesday, the US Trade Representative's Office (USTR) said the tax and statements from French officials "suggest that France is wrongly targeting the tax on certain US-based technology companies."
"The United States is very concerned that the tax on digital services expected to pass through the French Senate tomorrow is unfairly directed against US companies," USTR Robert Lighthizer said in the statement, adding that President Trump had ordered the investigation. Once the investigation is complete, the US will respond according to the statement.
American business groups jumped to beat the French proposal. The American Chamber of Commerce said in a statement that the plan "damages US companies and employees." The IT council, which includes Apple, Google, Facebook and Amazon, said the legislation was "a badly disguised attempt to target companies that are thought to be too powerful, too profitable, and too American."