Amazon, Google, and Meta may face an upgrade of France's digital tax, and the U.S. may retaliate

According to Zhitong Finance APP, French lawmakers have voted to pass a bill imposing higher taxes on large technology companies, a move that could provoke retaliatory measures from U.S. President Trump. The president has long threatened to retaliate through trade tariffs.

The French National Assembly (lower house) passed an amendment to the 2026 budget proposal on Tuesday evening, which could raise the digital services tax rate on companies such as Amazon, Alphabet (Google's parent company), and Meta Platforms (Facebook's parent company) from the current 3% to 6%.

This change is more moderate than another proposal to raise the rate to 15%, but it still signifies a significant increase in taxes that have exacerbated transatlantic trade tensions for years.

U.S. Republican lawmakers have warned that raising the rate to 15% would be an "unwarranted attack" on American tech companies and would leave "Congress and the Trump administration with little choice but to take aggressive retaliatory action."

This amendment is part of the budget proposal that may be voted on next month or in December, and it does not guarantee that it will ultimately become law. The French government does not hold a majority in parliament and has stated that it will not use constitutional tools to bypass voting, effectively ceding more control over fiscal legislation to lawmakers.

The French government is also cautious about this initiative and has stated that it will continue to work with parliament, even though the proposal to raise the rate to 6% comes from lawmakers of President Emmanuel Macron's party.

French tech tax revenue is on the rise

Finance Minister Roland Lescure stated, "I have noted the parliament's desire to strengthen taxes on digital giants," adding, "This issue must be handled with caution, especially regarding the threshold for raising tax rates; we must make progress at the European level and through international discussions."

The French government is under pressure to find measures to control what has become the largest fiscal deficit in the Eurozone. To make matters worse, the opposition has threatened to pass a vote of no confidence to oust Prime Minister Sébastien Lecornu in the coming weeks if taxes on large corporations and the wealthiest individuals are not significantly increased.

On Monday, the government sought to appease lawmakers and increase revenue by amending its initially planned corporate tax rate.

Another amendment proposed and passed by the far-left opposition on Tuesday evening would impose a universal tax based on the proportion of multinational companies' business activities in France. Lescure stated that this measure would be "unimplementable" as it could violate France's 125 bilateral tax treaties.

France was one of the first countries to implement a digital services tax in 2019, targeting the revenues of global tech companies. At that time, Trump stated that the tax constituted unfair discrimination against U.S. companies and threatened to impose tariffs on iconic French products, including cheese, sparkling wine, and handbags, in retaliation.

Ultimately, both sides reached a truce through negotiations, under which France would abolish its digital services tax once global new tax rules for digital multinationals came into effect. However, negotiations on these rules have never reached a final agreement Lawmakers proposing to raise the tax rate from 3% to 6% stated that the approximately €700 million (USD 814 million) in revenue France receives from this tax each year is still "disproportionate" compared to the profits large tech companies make in France.

The amendment will also raise the global revenue threshold for companies subject to this tax from the previous €750 million to €2 billion