U.S. trade officials finalizing investigation into France's digital tax
The 3% tax would be placed on companies with more than $834 million in revenue globally
The U.S. Trade Representative (USTR) said it is completing its investigation into France's digital services tax.
France in March introduced the 3 percent tax on companies with more than $834 million in revenue globally and more than $27 million in revenue in France made through certain digital services.
The USTR "is in the process of completing its investigation, under Section 301 of the Trade Act of 1974, of France’s Digital Services Tax (DST) and intends to issue its report in that investigation on Monday, December 2, 2019. At that time, the [USTR] also will announce any proposed action in the investigation," reads a statement the USTR released Wednesday.
Some U.S. tech giants such as Google, Apple, Facebook and Amazon said the French tax, known as GAFA -- an acronym representing all four companies -- unfairly targets them.
The White House said that "France’s unilateral measure appears to target innovative U.S. technology firms that provide services in distinct sectors of the economy."
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Facebook global tax policy head Alan Lee testified against the tax in August, saying it "poses difficulties for Facebook’s business model and will hinder growth and innovation in the digital economy."
Nicholas Bramble of Google’s trade policy counsel said in written testimony that France’s tax is "a sharp departure from long-established tax rules and uniquely targets a subset of businesses" and is "likely to generate disputes on whether specific digital activities were ‘supplied in France’ or in another region."
People walk by the Google office building on Ninth Avenue in New York. (AP Photo/Mark Lennihan, File)
Google's vice president of government affairs and public policy, Karan Bhatia, said the company expressed support for the modernization of digital regulation, affirming its contribution to the communities where they work. However, Bhatia said reform must reflect fair business practices.
"We hope governments can develop a consensus around a new framework for fair taxation, giving companies operating around the world clear rules that promote a sensible business investment," Bhatia said.
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The purpose of the tax is to remove the loophole that allows million- and billion-dollar companies to avoid paying high taxes.
"Digital giants pay 14 percentage points less tax than European [small- and medium-sized enterprises]. The fact that these companies pay less tax than a cheese producer in Quercy is a real problem," France Economy Minister Bruno Le Maire said in an April 3 interview in the Le Parisien.
Inside Apple's Fifth Avenue flagship. (Getty Images)
The U.S. and Paris compromised on a French digital tax in late August after President Trump threatened to impose tariffs on French wine if the deal fell through.
U.S. Trade Representative Robert Lighthizer said the purpose of the investigation is to "determine whether [the tax] is discriminatory or unreasonable and burdens or restricts United States commerce."
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FOX Business' Rachel Tesler contributed to this report.