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USTR Announces Initiation of Section 301 Investigation into France’s Digital Services Tax

July 10, 2019

Washington, DC – On July 10, 2019, the United States Trade Representative (USTR) initiated an investigation under Section 301 of the Trade Act of 1974 of the Digital Services Tax (DST) of the Government of France.

The French DST bill would impose a 3% tax on total annual revenues generated by some companies from providing certain digital services to, or aimed at, French users.  The tax applies only to companies with total annual revenues from the covered services of at least €750 million globally and €25 million in France.  The services covered are ones where U.S. firms are global leaders.  The structure of the proposed new tax as well as statements by officials suggest that France is unfairly targeting the tax at certain U.S.-based technology companies.

“The United States is very concerned that the digital services tax which is expected to pass the French Senate tomorrow unfairly targets American companies,” said U.S. Trade Representative Robert Lighthizer.  “The President has directed that we investigate the effects of this legislation and determine whether it is discriminatory or unreasonable and burdens or restricts United States commerce.”

Section 301 and related provisions of the Trade Act (codified as amended in 19 U.S.C. §§ 2411-2417) give the USTR broad authority to investigate and respond to a foreign country’s unfair trade practices.  USTR will issue a Federal Register Notice providing information on how members of the public may provide their views through written submissions and a public hearing. 

The United States will continue its efforts with other countries at the OECD to reach a multilateral agreement to address the challenges to the international tax system posed by an increasingly digitized global economy.

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