Several days ago, the United States announced that it would investigate France’s proposed “digital tax” to determine whether it unfairly targets U.S. companies. Despite that threat, however, the French government has approved the tax and is moving forward with it.
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As detailed by the BBC, the French senate has approved the tax, despite the looming threat from the United States investigation. The tax targets any digital company, including Apple, with revenue of more than $750 million, of which at least $28 million is generated in France.
The tax targets around 30 different companies, including Apple, Alphabet, Facebook, Microsoft, and Amazon.
Under this new legislation, such tech companies will be required to pay a 3 percent tax on sales made in the country. Notably, this is on sales, not profits. The new tax will be retroactively applied from the beginning of this year, with the French government expecting to raise over $400 million in 2019.
Meanwhile, United States investigation aims to determine whether the tax unfairly targets American companies. France, however, says the goal of the tax is to make sure tech giants are paying their fair share of tax in countries where they do not have a large physical presence.
While France has passed its own tax, the country also continues to push for a similar tax across all of the European Union. If a similar measure is reached internationally, France says it will end its tax in favor of the international implementation.
U.S. Trade Representative Robert Lighthizer has one year to investigate the tax. Reports suggest that it could result in the United States imposing new tariffs or other trade restrictions on France.