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U.S. To Investigate France's Plans To Tax Tech Firms

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President Donald Trump has ordered an investigation into the French government's proposed tax on major tech companies providing internet services in that country.

"The United States is very concerned that the digital services tax which is expected to pass the French Senate tomorrow unfairly targets American companies," US Trade Representative Robert Lighthizer said in a statement Wednesday.

The upper house of the French parliament is scheduled to vote on the measure Thursday, days after the National Assembly, the lower house, ratified it.

Lighthizer said Trump has directed him to investigate the effects of the French legislation, and "determine whether it is discriminatory or unreasonable and burdens or restricts United States commerce."

The French Digital Services Tax (DST) Bill proposes 3 percent tax on big internet service providers operating in the country.

The tax applies only to companies with total annual revenues of at least EUR750 million ($845 million) globally and EUR25 million in France.

American tech giants such as Facebook and Google, owned by Alphabet Inc., will be the worst affected by the proposal.

The structure of the proposed new tax as well as statements by officials suggests that France is unfairly targeting the tax at certain U.S.-based technology companies, according to the US Trade Representative.

He added that section 301 and related provisions of France's Trade Act give the USTR broad authority to investigate and respond to a foreign country's unfair trade practices, an apparent indication that the United States will respond with retaliatory tariffs on French companies.

The inquiry move received bipartisan support in the Senate Finance Committee, with Chairman Chuck Grassley ((R-IA) and senior member Ron Wyden (R-IA) welcoming it.

"The digital services tax that France and other European countries are pursuing is clearly protectionist and unfairly targets American companies in a way that will cost US jobs and harm American workers," they said in a joint statement.

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