The United States has scrapped a new tariff on French goods in retaliation for a digital services tax. Goods including cosmetics, handbags and luxury items would have been subject to a 25 percent import tax.

The U.S. is investigating the digital tax which it says could harm its native tech companies. Many European nations view a digital service tax as a way to raise revenue from the local operations of big tech companies, who often pay very little tax despite enormous profits in local markets.

The U.S. Trade Representative’s office (USTR) said the tariffs on imports of the French goods, which are valued at around 1.3 billion dollars annually and were due to go into effect on Wednesday, would be suspended indefinitely.

As reported by Reuters, Washington announced its new tariffs measures in July after a U.S. investigation showed a French digital services tax (DST) unfairly singled out U.S. companies such as Google, Facebook, Apple, and Amazon.

USTR said suspending the action against France would allow Washington to pursue a coordinated response in 10 investigations into similar taxes in India, Italy, Britain and other countries. It gave no timeframe for further action.

European leaders and industry groups welcomed the news, saying it would allow more time for talks on a global taxation solution to bear fruit.

Article source: Reuters

 

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