Despite threats of retaliatory tariffs from the Trump administration, French lawmakers on Thursday passed a “pioneering” 3 percent tax targeting the revenues that giant technology firms generate within France.
The new tax applies to “revenue from digital services earned in France by firms with more than 25 million euros ($28 million) in French revenue and 750 million euros ($845 million) worldwide,” according to Reuters. The legislation “is due to kick in retroactively” from the start of the year and—barring an unlikely request from French lawmakers or the government for a final review by the Constitutional Council—it is expected to be enacted within 21 days.
The French Finance Ministry reportedly estimated that the digital services tax initially will raise about 500 million euros ($563 million) per year but projected that figure will increase quickly.
With lawmakers’ passage of GAFA tax—which stands for Google, Apple, Facebook, and Amazon—France is the first European nation and first major global economy to adopt such legislation, though other countries are working on similar plans.
The French Senate approved the tax Thursday, a week after the legislation passed the French National Assembly and a day after U.S. Trade Representative Robert Lighthizer announced a probe of the measure’s effects under Section 301 of the Trade Act of 1974, which paves a path for future tariffs.
Lighthizer explained in a statement that the administration is very concerned the French tax “unfairly targets American companies,” so President Donald Trump has ordered the investigation to “determine whether it is discriminatory or unreasonable and burdens or restricts United States commerce.”
The probe announcement earned bipartisan praise from the leaders of the Senate Finance Committee. Sens. Chuck Grassley (R-Iowa) and Ron Wyden (D-Ore.) said in a joint statement that “the digital services tax that France and other European countries are pursuing is clearly protectionist and unfairly targets American companies in a way that will cost U.S. jobs and harm American workers.”
Trade groups that represent tech giants, such as the Computer and Communications Industry Association and the Internet Association, also have attacked the French legislation as discriminatory. Most of companies set to be impacted by the tax are U.S-based.
Addressing potential U.S. tariffs in comments before the Senate vote Thursday, French Finance Minister Bruno Le Maire said: “Between allies, we can and should solve our disputes not by threats but through other ways… France is a sovereign country, its decisions on tax matters are sovereign and will continue to be sovereign.”
SCROLL TO CONTINUE WITH CONTENT