On Wednesday, U.S. trade representative Robert Lighthizer said the U.S. will investigate if this tax unfairly targets U.S. companies. Companies such as Alphabet Inc's Google, Apple Inc, Facebook Inc and Amazon.com Inc would likely be subject to the tax.
The French DST bill would impose a 3 percent tax on total annual revenues generated by some companies from providing certain digital services to, or aimed at, French users, said the Office of the US Trade Representative.
Air France said the new tax would significantly hurt its competitiveness and represent an additional cost of over €60 million per year.
Jennifer McCloskey, vice president of policy at ITI, a USA tech-industry association said in a statement: "France's move to enact a unilateral, national digital tax opens the door to a fragmented, inefficient global tax system that would reduce business certainty and impede innovation, job creation, and economic growth worldwide".
Just ahead of the vote Thursday, French economy minister Bruno Le Maire said allies needed to settle differences "without using threats".
French Finance Minister Bruno Le Maire said in March that the tax on the French revenue of large internet companies could yield Euro 500 million per year.
The tech giants argue that they are complying with national and worldwide tax laws.
Lighthizer will reportedly be given up to a year to look into whether the French plan would hurt U.S. technology firms, and suggest retaliatory measures.
Plans to launch trade talks between Washington and Brussels have, however, been hampered by USA tariffs on steel and by European Union states' reluctance to include farm products in the talks.
"France is sovereign country, its decisions on tax matters are sovereign and will continue to be sovereign", he added. Le Maire added that the United States and France could find agreements rather than use threats to decide upon fair taxation levels.
It is expected that the UK, Spain, and Italy will also be introducing their versions of a digital tax. "And it will be a huge problem if we do not find a way to raise (digital) taxes", she told French radio in April.
The lawmakers included a suggestion to use a section of the tax code that would double the rate of US taxes on French citizens and companies in the U.S. Previously, the Trump administration had used Section 301 to probe China's technology policies, which allowed for billions in tariffs on Chinese imports.
"This is a critical step toward preventing protectionist taxes on global trade", CCIA official Matt Schruers said in a statement, calling on France "to lead the effort toward more ambitious global tax reform, instead of the discriminatory national tax measures that harm global trade".