France Moves Toward Digital Tax, Stoking Fight With White House

France Moves Toward Digital Tax, Stoking Fight With White House

PARIS — President Emmanuel Macron’s government waded into a potentially messy fight with the White House on Thursday as French lawmakers voted to impose a tax on Facebook, Google and other American technology giants despite a blunt warning from the Trump administration.

The measure, which the White House said could amount to an unfair trade practice, is likely to be signed into law by Mr. Macron within two weeks, placing France squarely in the cross hairs of Mr. Trump’s escalating trade wars.

The finance minister, Bruno Le Maire, told the French Senate before the vote that United States Treasury Secretary Steven Mnuchin and Robert Lighthizer, the White House’s top trade negotiator, phoned him on Wednesday to say the United States was opening an investigation into the French tax using a mechanism that Mr. Trump has already employed to impose sweeping tariffs on China.

It was the first time in the history of French-American relations that the United States had taken such a step, Mr. Le Maire said. “I believe that between allies we can and must sort out differences in other ways than by using threats,” he said.

“France is a sovereign nation that decides its own tax rules. And this will continue to be the case,” he added.

France has moved independently from the European Union to seek a tax on technology companies after little progress was made to craft Europe-wide rules to tax the largest tech platforms. Mr. Macron accelerated the French tax plan earlier this year after waves of angry Yellow Vest protesters forced his government to make billions of euros worth of spending concessions that widened the country’s budget shortfall.

Mr. Le Maire described Thursday’s vote as a pivotal moment in which governments needed to stand up to digital behemoths that he said were becoming the equivalent of sovereign states, acting with virtual impunity as they maneuvered to keep their tax bills low across the world.

“We’re being confronted with the emergence of economic giants that are monopolistic and that not only want to control the maximum amount of data, but also escape fair taxes,” he said. “It’s a question of justice.”

France is seeking a 3 percent tax on the revenues companies earn from providing digital services to French users. It would apply to digital businesses with annual global revenue of more than 750 million euros, or about $845 million, and sales of €25 million in France. That would cover more than two dozen companies, many of them American, including Facebook, Google and Amazon.

The government expects to collect around 500 million euros, or about $563 million. France’s General Assembly passed the bill last week.

In a statement Wednesday, Mr. Lighthizer that the United States was “very concerned that the digital services tax which is expected to pass the French Senate tomorrow unfairly targets American companies.”

“The president has directed that we investigate the effects of this legislation and determine whether it is discriminatory or unreasonable and burdens or restricts United States commerce,” Mr. Lighthizer said.

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