The United States Trade Representative (USTR) has completed the first segment of its investigation under section 301 of the Trade Act of 1974. The investigation concluded that France’s Digital Services Tax (DST) discriminates against US companies, is inconsistent with prevailing principles of international tax policy, and is unusually burdensome for affected US companies.

Specifically, USTR’s investigation found that the French DST discriminates against US digital companies, such as Google, Apple, Facebook, and Amazon. In addition, the French DST is inconsistent with prevailing tax principles on account of its retroactivity, its application to revenue rather than income, its extraterritorial application, and its purpose of penalizing particular US technology companies.

“USTR’s decision today sends a clear signal that the United States will take action against digital tax regimes that discriminate or otherwise impose undue burdens on US companies,” said US Trade Representative Robert Lighthizer in a press statement released on Monday.

Mr Lighthizer also said he is exploring whether to open Section 301 investigations into the digital services taxes of Austria, Italy, and Turkey.

A report available on USTR’s website sets out the findings of the investigation.

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