WASHINGTON: The United States unveiled heavy import duties on France on Friday in retaliation for the country’s tax on American tech giants, but will refrain from collecting fees to allow time to resolve the dispute.
The office of the US Trade Representative, Robert Lighthizer, estimated that the French tax on digital services was discriminatory and “unfairly targeted American digital technology companies” and would impose punitive duties of 25% on $ 1.3 billion in French products.
However, it will suspend tariffs until January 6, 2021 while discussions continue on the disagreement.
France approved the tax last summer on tech companies like Facebook, Amazon, Apple and Google, which have been accused of shifting profits abroad to escape taxes.
But in January, Paris suspended the collection of the tax until the end of the year.
French cosmetics and handbags will be subject to U.S. tariffs, but champagne, camembert, and Roquefort have been spared, according to the final product list after the USTR gathered thousands of public comments on the plans. reprisals.
The parties attempted to negotiate an agreement through the Organization for Economic Co-operation and Development that would resolve the political dilemma of taxing profits made in one country by a business based in another with a more favorable tax policy.
But the talks have not progressed much and have been suspended due to the coronavirus pandemic. At the same time, more countries are considering following the example of France.
Lighthizer said on Thursday that the United States “would not tolerate” unfair treatment, although it acknowledged that there was a problem with multinational companies that offshore profits to avoid paying taxes.
But he said the French tax “hadn’t even managed to hide the fact that they were just trying to get into the pockets of American companies.”
A USTR investigation in January ruled that the tax was “unreasonable” and threatened 100 percent duty on a potential $ 2.4 billion list of French products.
Vitor Gaspar, head of the IMF’s tax affairs department, told AFP on Friday that there was “a perception that the extremely profitable businesses that operate around the world are not paying their fair share of taxes” , and called for a deal.
“It is very important to avoid trade wars, it is very important to avoid tax wars,” Gaspar said in an interview.
“A cooperative approach is in the best interest of all,” he said, noting that it would be “a signal of the ability of the global community to work together if an agreement on international corporate taxation is reached”.
Matt Schruers, president of the Computer and Communications Industry Association, welcomed the US decision.
“Today’s action sends a strong message that discriminatory taxes targeting American businesses are not a way to modernize the global tax system,” Schruers said in a statement.
“Changes to international tax rules must be negotiated in good faith through a consensus approach at the OECD that addresses changes in the digital global economy. “