France's digital services tax would impose a 3% tax on annual revenues of certain large digital companies.
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. Finance minister La Maire reckons that, once in place, the new digital tax will raise up to 500 million euros ($565 million / £449 million) per year.
Lightizer added that the services targeted by the proposed tax "are ones where USA firms are global leaders" and that the proposed tax "as well as statements by officials suggest that France is unfairly targeting the tax at certain us -based technology companies". France's Parliament is likely to approve plans for the new tax on Thursday, the BBC reported.
Addressing potential USA 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".
They had proposed a 3 percent tax on European advertising sales by digital companies, rather than the broad tax on the total revenues of large digital firms originally suggested.
Moreover, the tech giants themselves adopted a supportive stance for the United States investigation, with Amazon issuing a statement saying that they "applaud the Trump Administration for taking decisive action against France and for signalling to all of America's trading partners that the U.S. government will not acquiesce to tax and trade policies that discriminate against American businesses".More news: Wimbledon: Centre of attention for rivals Rafael Nadal and Roger Federer
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The French government has argued that such firms headquartered outside the country pay little or no tax. The administration says it could invoke the same 1970s-era laws it used to slap tariffs on imports from China and other trading partners, including traditional USA allies. The proposed digital services tax may not be limited to France, since it's being looked at by other European countries as well.
With the Thursday vote, France became the first major economy to pass such a tax law.
"France is sovereign country, its decisions on tax matters are sovereign and will continue to be sovereign", he added.
The minister advised that the USA and France can do well by reaching agreements instead of bandying out threats against "fair taxation" of internet giants.
While tech companies are presumably happy that the United States is hitting back at attempts to tax them more, this still sets up potential conflicts.
Amazon then praised the Trump administration for taking action and for signaling to the rest of the world that the USA government will not accept policies that discriminate against American businesses.