Digital Tax Payback As US Vows Tax On Champagne, Cheese

The United States government has, as expected, outlined its response toward France over its decision to impose a digital tax on foreign (mostly US) tech firms at the start of 2019.

According to Reuters, the US Trade Representative’s office said its “Section 301” investigation found that the French tax was “inconsistent with prevailing principles of international tax policy, and is unusually burdensome for affected US companies”.

And it is proposing a harsh response – warning it may slap punitive duties of up to 100 percent on $2.4 billion in imports from France of champagne, handbags, cheese and other products.

US response

US Trade Representative Robert Lighthizer was quoted by Reuters as saying the US government was exploring whether to open similar investigations into the digital services taxes of Austria, Italy and Turkey.

“The USTR is focused on countering the growing protectionism of EU member states, which unfairly targets US companies,” Lighthizer reportedly said.

He made no mention of proposed digital taxes in Canada or Great Britain.

The US government trade agency is to collect public comments until 14 January 2020 about its proposed tariff list as well as the option of imposing fees or restrictions on French services, with a public hearing scheduled for 7 January.

There is no date scheduled for the imposition for the proposed 100 percent duties on French goods.

Tech taxes

Other countries are planning to follow this digital tax route, as tech companies have long been criticised for their tax practices that sees them reducing their tax bills by booking profits in low-tax countries (such as Ireland) regardless of the location of the end customer.

Plans for an EU-wide digital tax have so far foundered upon the objections of those countries, forcing member states including the UK and France to push ahead with their own national levies.

The UK has yet to set a date.

Italy is to implement its own digital or tech tax from January 2020, when it will implement a 3 percent tax on large-scale online sales beginning next year.

Spain and Germany are also proposing their own national digital taxes.

For their part, tech companies have previously defended their tax structures, and insist they abide by tax laws as they’re currently written.

Global tech tax rules meanwhile are set to be agreed by 2020.

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