US To Impose But Suspend Tariffs On France Over Tech Tax: Official

The United States plans to hit France with punitive tariffs over taxes that target American tech giants, but then will suspend them, US Trade Representative Robert Lighthizer said.

President Donald Trump's administration has complained the digital services tax that France approved last summer discriminates against Facebook, Amazon, Apple and Google. The companies are accused of moving their profits offshore to evade taxes.

France in January suspended collection of the tax.

Lighthizer said Thursday that the US "won't tolerate" the unfair treatment, although he acknowledged that there is a problem with multinational corporations that move to other countries to avoid paying taxes.

"We're going to announce that we're going to take certain sanctions against France, suspending them like they're suspending collection of taxes right now," Lighthizer said in a virtual event with Chatham House in London.

A USTR investigation in January ruled the tax was "unreasonable" and threatened 100 percent duties on French goods, with a potential list of $2.4 billion in products including cheeses, beauty products and handbags.

France has sought a diplomatic resolution, including by negotiating a broader international tax framework to deal with digital commerce, under the auspices of the OECD.

But those discussions have so far failed -- Lighthizer told Congress last month there had been no progress, and Treasury Secretary Steven Mnuchin called for a pause in talks.

Vitor Gaspar, head of the IMF's fiscal affairs department, told AFP that there is "a perception that firms that are extremely profitable, that act in the global sphere, are not paying their fair share of taxation," and he called for an international agreement.

"It's very important to avoid trade wars, it's very important to avoid tax wars," Gaspar said in an interview.

A "cooperative approach is in the best interest of everybody," he said, noting it would be "a signal of the capacity of the global community to work together if a deal on international corporate taxation would be struck."

Lighthizer said the solution to the issue of offshoring profits used by France and being considered by other nations "is a very unfair and discriminatory system and the United States won't tolerate it."

"These Digital Services Taxes, the way they were designed, they didn't even do a clever job of veiling the fact that they were just trying to get into the pocket of US companies," Lighthizer said.