WASHINGTON, D.C. — Congressman Darin LaHood (R-IL) led a letter to President Donald Trump urging his administration use all appropriate tools to address France and other European countries proposed digital services tax that targets US companies, US exports, and the US tax base. Rep. LaHood was joined by 15 Republicans on the Ways and Means Committee.
“Proposals by the French and other countries designed to explicitly target US companies through a digital services tax is wholly unacceptable and the US should be prepared to use any necessary tools to combat these actions,” stated Rep. LaHood. “Efforts by the French and others contradict longstanding global consensus-based practices and would result in double taxation on American businesses. We cannot sit on the sidelines as countries attempt to fund their governments by seizing the revenue of American businesses. I am proud to lead this effort and I urge President Trump and his Administration to forcefully engage on this issue, making it known that these types of practices won’t stand.”
The Digital Services Tax
Across Europe, countries are proposing discriminatory three to five percent revenue taxes on digital services U.S. technology firms provide. These Digital Service Taxes (DST) are narrow in scope and are specifically designed to target U.S. digital companies that export services into European countries. These proposals directly contradict the international trade commitments made by the European Union and the global consensus-based Organization for Economic Cooperation and Development (OECD) process.
In March of 2019, the French government proposed a unilateral DST on digital advertising, online platforms, and the transfer of data specifically aimed at U.S. technology companies. Under the proposal, U.S. companies could be charged up to 5 percent on gross revenue and it would be enacted retroactively to January 1, 2019. The French have made it explicitly clear that this proposal is designed for the purpose of going after American businesses and Finance Minister Lemaire has indicated this will raise the French over 500 million euros.
Beyond Europe, the World is Keenly Watching
The French proposal comes on the heels of the European Union’s decision late last year to reject new revenue taxes narrowly targeted at U.S. digital companies. In addition, Germany, the United Kingdom, Italy, Spain, and Austria have proposed implementing similar digital service taxes. As European countries consider these discriminatory actions, the global community is looking on and preparing to follow the lead of others in targeting U.S. tech companies. American businesses shouldn’t have their revenue seized to subsidize governments around the world and the U.S. should be prepared to engage on this issue.