January 8, 2021

U.S. Suspends French Tariffs Over Digital Services Tax

The United States is holding off on imposing tariffs on French cosmetics, handbags and other imports in retaliation for a digital services tax Washington says will harm U.S. tech firms, while it investigates similar taxes elsewhere.

The U.S. Trade Representative’s office said the 25% tariffs on imports of the French goods, which are valued at around $1.3 billion annually and were due to go into effect on Wednesday, would be suspended indefinitely.

Washington had announced the tariffs in July after a U.S. investigation showed a French digital services tax (DST) unfairly singled out U.S. companies such as Google, Facebook, Apple, and Amazon.

France and other countries view digital service taxes as a way to raise revenue from the local operations of big tech companies which they say profit enormously from local markets while making only limited contributions to public coffers.

USTR said suspending the action against France would allow Washington to pursue a coordinated response in 10 investigations into similar taxes in India, Italy, Britain and other countries. It gave no timeframe for further action.

European leaders and industry groups welcomed the news, saying it would allow more time for talks on a global taxation solution to bear fruit.

(Source: Reuters)