by Mike Godfrey, Tax-News.com Washington
17 July 2020
The Office of the US Trade Representative has announced that the US will impose additional duties of 25 percent on imports of certain French products from next year in response to the country’s decision to introduce a digital services tax (DST).
The US considers that France’s DST “is unreasonable or discriminatory and burdens or restricts US commerce.” The duties will take effect on January 6, 2021, unless France and the United States reaches a compromise on the measure in the meantime.
The products attracting the additional duties mainly include cosmetics, soaps, and handbags.
The French DST is a three percent tax on the revenue of digital companies providing advertising services, selling user data for advertising purposes, or performing certain intermediation services. Companies with global revenues of EUR750m (USD847m) or more and French sales of at least EUR25m are required to pay the tax.
The tax, approved by the French parliament on July 11, 2019, applies to turnover realized in France since January 1, 2019. However, earlier this year, the Government suspended collection of the DST until December 2020, in a bid to stop the US from applying retaliatory tariffs of up to 100 percent on certain French goods.