Trump defends internet giants and launches investigation into France’s proposed tax on Google

Donald Trump has ordered an investigation into France’s proposed tax on tech giants including Google and Facebook.

A trade representative for the President said US companies were being ‘unfairly targeted’ by the sanctions which sees companies including Amazon and Apple pay a three per cent levy on revenue made inside the country.

Today, France became the first major economy to impose a tax on digital giants, with parliament passing the legislation in defiance of a probe ordered by Trump that could trigger reprisal tariffs. 

Donald Trump has ordered an investigation into France’s proposed tax on tech giants including Google and Facebook

Yesterday,  Trade Representative Robert Lighthizer expressed concern saying ‘The United States is very concerned that the digital services tax which is expected to pass the French Senate tomorrow unfairly targets American companies.’

But French Economy Minister Bruno Le Maire France rejected the US reaction saying ‘threats’ were not the way to resolve such disputes.

‘Between allies, I believe we can and must resolve our differences in another way than through threats,’ he told the French Senate ahead of the vote.

‘France is a sovereign state and it alone decides on its taxation mechanisms and it will continue to do so,’ he said.

The legislation - dubbed the GAFA tax - an acronym for Google, Apple, Facebook and Amazon - was passed by a simple show of hands in the Senate upper house after previously being passed by the National Assembly lower chamber. Pictured: Emmanuel Macron

The legislation – dubbed the GAFA tax – an acronym for Google, Apple, Facebook and Amazon – was passed by a simple show of hands in the Senate upper house after previously being passed by the National Assembly lower chamber. Pictured: Emmanuel Macron

The new law aims at plugging a taxation gap that has seen some internet heavyweights paying next to nothing in countries where they make huge profits.

French lawmakers are set to pass the bill imposing a three per cent levy on revenue made inside the country. 

The legislation – dubbed the GAFA tax – an acronym for Google, Apple, Facebook and Amazon – was passed by a simple show of hands in the Senate upper house after previously being passed by the National Assembly lower chamber.

The new tax would be applied retrospectively from early 2019, and is expected to raise about €400m ($450m) each year. It has increased tensions between the US and France. Pictured: Trump and Macron at the G20 summit last month

The new tax would be applied retrospectively from early 2019, and is expected to raise about €400m ($450m) each year. It has increased tensions between the US and France. Pictured: Trump and Macron at the G20 summit last month

But the French move drew an angry response from Trump even before the legislation was passed, with the president ordering an investigation that the French economy minister said was unprecedented in the history of French-US relations. 

The new tax would be applied retrospectively from early 2019, and is expected to raise about €400m ($450m) each year.

Commenting on the power of social media this morning, Trump tweeted: ‘A big subject today at the White House Social Media Summit will be the tremendous dishonesty, bias, discrimination and suppression practiced by certain companies. 

‘We will not let them get away with it much longer. The Fake News Media will also be there, but for a limited period.. ‘

Commenting on the power of social media this morning, Trump tweeted: 'A big subject today at the White House Social Media Summit will be the tremendous dishonesty, bias, discrimination and suppression practiced by certain companies

Commenting on the power of social media this morning, Trump tweeted: ‘A big subject today at the White House Social Media Summit will be the tremendous dishonesty, bias, discrimination and suppression practiced by certain companies

He continued in a series of tweets, ‘kidding’ that he may be President for another 14 years, a violation of the 22nd amendment. 

‘ ….The Fake News is not as important, or as powerful, as Social Media. They have lost tremendous credibility since that day in November, 2016, that I came down the escalator with the person who was to become your future First Lady. When I ultimately leave office in six……

….years, or maybe 10 or 14 (just kidding), they will quickly go out of business for lack of credibility, or approval, from the public. That’s why they will all be Endorsing me at some point, one way or the other. Could you imagine having Sleepy Joe Biden, or @AlfredENeuman99,.. 

 …or a very nervous and skinny version of Pocahontas (1000/24th), as your President, rather than what you have now, so great looking and smart, a true Stable Genius! Sorry to say that even Social Media would be driven out of business along with, and finally, the Fake News Media!’  

The French move drew an angry response from Trump even before the legislation was passed, with the president ordering an investigation that the French economy minister said was unprecedented in the history of French-US relations

The French move drew an angry response from Trump even before the legislation was passed, with the president ordering an investigation that the French economy minister said was unprecedented in the history of French-US relations 

Le Maire previously said he was warned about the so-called Section 301 investigation during a ‘long conversation’ with US Treasury Secretary Steven Mnuchin on Wednesday, saying it was the first time such a step had been taken in the history of French-US relations.

This type of investigation is the primary tool the Trump administration has used in the trade war with China to justify tariffs against what the United States says are unfair trade practices.

The measure was initially adopted by the lower house on July 4.

Last month, top G20 finance chiefs meeting in Japan agreed there was an urgent need to find a global system to tax internet giants like Google and Facebook but clashed over how to do it.

Last month, top G20 finance chiefs meeting in Japan agreed there was an urgent need to find a global system to tax internet giants like Google and Facebook but clashed over how to do it

Last month, top G20 finance chiefs meeting in Japan agreed there was an urgent need to find a global system to tax internet giants like Google and Facebook but clashed over how to do it

But they welcomed a set of proposed measures laid out by the Organization for Economic Co-operation and Development (OECD), a forum for advanced economies.

‘We will redouble our efforts for a consensus-based solution with a final report by 2020,’ they said in a statement.

Washington has been pushing through the G20 for an overarching agreement on taxation.

Such a move is supported by Google which believes it would mean Silicon Valley tech giants would pay less tax in the US and more in other jurisdictions, in a departure from the longstanding practice of paying most taxes in a company’s home country.

The section 301 investigation, which is being run by the US Trade Representative’s office, has said it will hold hearings to allow for public comment on the French tax issue for several weeks before issuing a final report.

The move was applauded by the Computer & Communications Industry Association which said the French law would retroactively require US internet giants to turn over a percentage of their revenues from the start of 2019.

‘This is a critical step toward preventing protectionist taxes on global trade,’ CCIA official Matt Schruers said in a statement, calling on France ‘to lead the effort toward more ambitious global tax reform, instead of the discriminatory national tax measures that harm global trade.’ 

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