The U.S. Trade Representative’s Office said Wednesday it would announce next week if it would retaliate against France for a tax on digital services instituted earlier this year.
The tax takes 3% of the annual revenue of technology companies such as Amazon, Apple, and Facebook made from French users.
“The United States Trade Representative is in the process of completing its investigation, under Section 301 of the Trade Act of 1974, of France’s Digital Services Tax and intends to issue its report in that investigation on Monday, December 2, 2019,” the federal agency said. “At that time, the United States Trade Representative also will announce any proposed action in the investigation.”
France adopted the tax on tech companies to make it difficult for them to shift profits to low-tax jurisdictions in the European Union, such as Ireland. The Trump administration repeatedly warned against such measures as the French Parliament was debating the legislation. The tech companies have argued that they have followed the existing tax rules of the EU.
French President Emmanuel Macron announced in August that a deal was reached with the U.S. regarding the tax, but President Trump declined to confirm there was an agreement, and the USTR’s investigation continued.
USTR’s inquiry into France’s tax used the same section of the Trade Act used by the White House to levy tariffs of up to 25% on $550 billion worth of Chinese goods.
The U.S. and EU have been in discussions to start trade talks, but negotiations haven’t progressed because of a dispute over whether EU agricultural policies will be up for discussion. The EU has ruled that out while the U.S. has demanded they be included.
