US warns of WTO action over 'discriminatory' digital services taxes on tech companies

Treasury official Chip Harter asks EU countries to go for tax reform at the OECD

The US has warned France and other European Union (EU) countries that it may file a complaint at the World Trade Organisation (WTO) over "discriminatory" new taxes on US internet and technology companies.

Treasury official Chip Harter described such taxes as "ill-conceived" and suggested that EU countries must go for tax reform at the Organisation for Economic Co-operation and Development (OECD).

"The United States opposes any digital services tax proposals whether they be French or UK," Harter said in Paris, ahead of two days of global tax talks.

According to Reuters, many EU countries, including the UK, France, Spain and Italy, are planning to impose new taxes at American tech giants like Apple, Google and Facebook after collapse of EU ' s plan for tax reforms.

Australia has also announced that it is considering levying a similar tax at national level.

Many countries claim that it is unfair that internet companies can declare their income from online services in countries with the lowest tax rates, depriving other countries of billions in revenue.

Paris-based OECD is currently trying to build consensus among member states on taxing such companies, although implementing any new agreement reached among the members would still take minimum one year.

Last week, French government revealed new draft legislation, dubbed "GAFA" tax (for Google, Apple, Facebook and Amazon), which proposes three per cent tax on digital advertising and other revenue for technology firms earning over 750 million euros (US$ 844 million) in revenues worldwide.

The new tax, if it is passed in the French parliament, would be applied backdated from 1st January 2019 and will affect about 30 technology firms from the US, Germany, China, UK, Spain and France.

Questioned regarding a potential WTO complaint by the US, French Finance Minister Bruno Le Maire was defiant, saying that France would decide its tax policies independently.

He added that the new bill will be introduced in the French parliament next month. Bruno agreed, however, that the best approach would be to reach a consensus at the OECD.

The Minister added that France will withdraw the tax once an international tax comes into effect.