US officials attempt to stave off EU trade war over digital tax

15 Aug 19

The US Chamber of Commerce has urged Donald Trump not to retaliate against France for introducing a tax on internet giants like Google and Facebook, voicing concerns it could lead to a trade war with Europe.

The chamber wrote to the US Trade Representative’s Office, which advises the president, arguing it would be best to settle the dispute through the World Trade Organisation (WTO).

Trump had previously threatened to impose a tariff on French wine if the European country introduced the tax.

Chamber of Commerce senior vice president for international policy John Murphy wrote that while he agreed the French tax was discriminatory and unreasonable, retaliation “would add to the potential for an escalating trade war with France and the EU” that would represent a “substantial risk” to the US economy.

Approved by the French senate last month, the Digital Services tax targets companies with more than €25m revenue in France and €750m worldwide.

The 3% tax on revenue earned in France was introduced to “re-establish fiscal justice”, the government said, because taxation of data is 14% lower than of other companies.

Government analysis identified about 30 companies the tax could apply to, most of them American and only one French.

Murphy wrote that this “de facto discrimination against US companies” violates a WTO agreement, and so dispute proceedings should be initiated there.

According to Reuters, Facebook, Google and Amazon are among companies that will testify at a US government hearing against the tax on Monday.

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