US to impose but suspend tariffs on France over tech tax: official

The United States plans to hit with France with punitive tariffs over taxes that target American tech giants, but then suspend them, US Trade Representative Robert Lighthizer said.

President Donald Trump’s administration has complained the digital services tax that France approved last summer discriminates against Facebook, Amazon, Apple and Google. The companies are accused of moving their profits offshore to evade taxes.

France in January suspended collection of the tax.

Lighthizer said Thursday that the US “won’t tolerate” the unfair treatment although he acknowledged that there is a problem with multinational corporations that move to other countries to avoid paying taxes.

“We’re going to announce that we’re going to take certain sanctions against France, suspending them like they’re suspending collection of taxes right now,” Lighthizer said in a virtual event with Chatham House in London.

A USTR investigation in January ruled the tax was “unreasonable” and threatened 100 percent duties on French goods, with a potential list of $2.4 billion in products including cheeses, beauty products and handbags.

“These Digital Services Tax, the way they were designed, they didn’t even do a clever job of veiling the fact that they were just trying to get into the pocket of US companies,” Lighthizer said.

The solution to the issue of offshoring profits “is a very unfair and discriminatory system and the United States won’t tolerate it.”

France has sought a diplomatic resolution, including by negotiating a broader international tax framework to deal with digital commerce, under the auspices of the OECD. 

But those discussions have so far failed, and last month Lighthizer told Congress there had been no progress, and Treasury Secretary Steven Mnuchin called for a pause in the talks.