WASHINGTON: The US Trade Representative's (USTR) Office will hold a hearing on Aug 19 in its probe of France's new planned tax on big technology companies, calling the proposal "unreasonable."
President Donald Trump on Wednesday ordered an investigation into the tax, which could lead to the United States imposing new tariffs or other trade restrictions.
USTR said in a public notice the levy was an "unreasonable tax policy." The plan departs from tax norms because of "extraterritoriality; taxing revenue not income; and a purpose of penalising particular technology companies for their commercial success," it said.
USTR added that statements by French officials suggest the tax will "amount to de facto discrimination against US companies ... while exempting smaller companies, particularly those that operate only in France."
The tax is due to apply retroactively from the start of 2019. USTR said that calls into question the fairness of the tax.
On Thursday, the French Senate approved the 3 per cent levy that will apply to revenue from digital services earned in France by firms with more than €25 million in French revenue and €750 million (US$845 million) worldwide.
The French Embassy in Washington declined to comment.
Other EU countries including Austria, Britain, Spain and Italy have also announced plans for their own digital taxes.
They say a levy is needed because big, multinational internet companies such as Facebook and Amazon are currently able to book profits in low-tax countries like Ireland, no matter where the revenue originates. Political pressure to respond has been growing as local retailers in high streets and online have been disadvantaged.