The French parliament on Thursday passed a law taxing digital firms like Google and Facebook, which have been accused of exploiting global tax loopholes. The decision comes after Washington launched a probe into the tax.
The three-percent tax will be levied on sales generated in France by multinational firms. Any digital company with revenue of more than €750 million ($850 million) – of which at least €25 million is generated in France – would be subject to the levy.
Defending the new tax, French Finance Minister Bruno Le Maire said the country was “sovereign and decided its own tax rules.”
“I want to tell our American friends that this should be an incentive for them to accelerate even more our work to find an agreement on the international taxation of digital services,” he said.
The law, which has been already dubbed the GAFA (Google, Apple, Facebook and Amazon) tax, has angered Washington, which had raised concerns that the tax would “unfairly target American companies.”
US President Donald Trump on Wednesday ordered an investigation into the French tax to “investigate the effects of this legislation and determine whether it is discriminatory or unreasonable and burdens or restricts United States commerce.”
The new tax will be based on sales generated in France, rather than on profits. It will be paid by all global multinationals – around 30 companies, mostly American – but also firms from China, Germany, Spain and Britain.
The tech giants argue that they are complying with national and international tax laws.