WASHINGTON: The United States unveiled heavy import duties on France in retaliation for the country’s tax on American tech giants, but will hold off on collecting the fees to allow time for the dispute to be resolved.
The office of US Trade Representative Robert Lighthizer found France’s digital services tax was discriminatory and “unfairly targets US digital technology companies,” and will impose 25 percent punitive duties on $1.3 billion in French products.
However, it will suspend the tariffs until January 6, 2021 while discussions continue over the disagreement.
France approved the tax last summer on tech firms like Facebook, Amazon, Apple and Google, which were accused of moving their profits offshore to evade taxes.
But in January, Paris suspended collection of the tax through the end of the year.
French cosmetics and handbags will be subject to the US tariffs, but champagne, camembert and Roquefort were spared, according to the final product list after USTR collected thousands of public comments on the retaliation plans.
The sides have been trying to a negotiate a deal through the Organisation for Economic Co-operation and Development that would address the policy dilemma of taxing profits earned in one country by a company based in another with a more favorable tax policy.
But the talks have not made much headway and were suspended due to the coronavirus pandemic. Meanwhile, more countries are considering following France’s example.
Lighthizer said Thursday that the US “won’t tolerate” unfair treatment, although he acknowledged that there is a problem with multinational corporations offshoring profits to avoid paying taxes.
But he said the French tax “didn’t even do a clever job of veiling the fact that they were just trying to get into the pocket of US companies.”