American tech giants Amazon, Facebook and Google joined forces on Monday to decry the French digital tax as retroactive and discriminatory - as they aligned themselves with President Trump's hardline response.
Trump has previously said he is considering retaliating against the tax, which was approved July 11, with punitive tariffs on French wine imports, prompting an investigation by the Office of the US Trade Representative (USTR).
The so-called GAFA companies appeared at a USTR hearing on possible countermeasures and were unanimous in their complaints, calling the tax a 'troubling precedent.'
The tax, which Washington considers unfair, adds yet another bone of contention to the transatlantic trade disputes that now also include steel, aluminum, automobiles, aircraft and agriculture.
The proposed three percent tax on total annual revenues of companies that provide services to French consumers applies only to the largest tech companies, which are mostly US-based.
Trump fumed at the move at the time, saying: 'We tax our companies, they don't tax our companies.'
Trump, pictured with French President Emmanuel Macron, had fumed at the tax, saying: 'We tax our companies, they don't tax our companies'
He tweeted last month: 'France just put a digital tax on our great American technology companies. If anybody taxes them, it should be their home Country, the USA. We will announce a substantial reciprocal action on Macron's foolishness shortly. I've always said American wine is better than French wine!'
He later told reporters in the White House he was considering a tariff on French wines as part of that 'retaliation.'
'I might. France has put tariff on American companies. I might,' he said. 'Wrong. Wrong thing to do. They should not do that.'
Trump does not drink but does own a winery in Virginia.
'I've always liked American wines better than French wines, even though I don't drink wine,' the president said.
For Amazon, where France represents the second largest European market for e-commerce, the levy 'creates a double taxation,' said Peter Hiltz, director of tax planning for the online retail giant.
Some 58 percent of Amazon's sales are through partner companies, which stand to take the hit.
The tax 'negatively impacts Amazon and thousands of small and medium businesses,' Hiltz said.
'Amazon cannot absorb the expenses,' and the company 'already informed partners that their fee will increase starting October 1,' he added.
Some internet heavyweights have taken advantage of low-tax jurisdictions in places like Ireland while paying next to nothing in other countries where they derive huge profits.
The United States has been pushing for an overarching agreement on taxation of digital commerce through the Group of 20 economic forum, but France pressed ahead on its own.
It is 'an imperfect solution to address an outdated tax system,' said Jennifer McCloskey of the Information Technology Industry Council, which supports a multilateral agreement under the auspices of the Organization of Economic Cooperation and Development.
Hiltz agreed, saying the companies believe 'an international agreement under the OECD is reachable.'
Amazon, Facebook and Google appeared at a USTR hearing on possible countermeasures to the French digital tax and were unanimous in calling the tax a 'troubling precedent'
The tax will apply to about 30 companies with at least $28 million (25 million euros) in sales in France and $831 million worldwide.
But it does not apply to other internet operators like media companies.
The tax touches 'a handful of internet business when every sector is becoming digital,' Google's Nicholas Bramble said at the hearing.
Taxing only this part of the industry 'doesn't make sense.'
The companies also complained that the tax is retroactive, since it will apply from the beginning of 2019 -- something they have 'never seen' before, according to Alan Lee of Facebook.