GAFA tax becomes law, US launches investigation

France became the first major economy to impose a tax on internet heavyweights, as on 11 July the parliament definitively adopted the GAFA law, an acronym for Google, Apple, Facebook and Amazon. The 3% tax on the French revenue of large internet companies could yield €500m a year. The tax would target some 30 companies, mostly American but also Chinese, German, Spanish and British, as well as one French firm and several firms with French origins that have been bought by foreign companies.

US President Donald Trump on Wednesday ordered an investigation into France's tax on technology companies, that could lead to the US imposing tariffs as part of a new trade tiff with the EU. “The US is very concerned that the digital services tax … unfairly targets American companies,” US Trade Representative Robert Lighthizer said in a statement announcing Trump's order. It gives Lighthizer up to a year to investigate if France's digital-tax plan would hurt US companies. France criticised the US move, saying it could trigger punitive tariffs and adding that “threats” were not the way to resolve disputes. “Between allies, I believe we can and must resolve our differences in another way than through threats,” Economy Minister Bruno Le Maire (pictured) told the French Senate ahead of the vote on the tax.

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