France and US seek to resolve digital tax dispute
France and the US have given themselves two weeks to resolve a bitter trade dispute over a new French digital tax targeting big tech companies such as Google and Amazon, Bruno Le Maire, the French finance minister, said on Tuesday.
Mr Le Maire, faced with the imminent prospect of a new round of US sanctions that could subject $2.4bn of French champagne and other products to 100 per cent tariffs, said he and Steven Mnuchin, US Treasury secretary, had “agreed to redouble the effort in the coming days to find a compromise on digital tax in the framework of the OECD”. They are due to meet again at the World Economic Forum in Davos later this month.
Mr Le Maire was speaking after a meeting in Paris with Phil Hogan, the EU’s new trade commissioner, who described digital taxation as “a very major bone of contention with the US”.
Mr Hogan said: “We will look at all possibilities if any tariffs or measures are imposed by the United States. The European Commission will stand together with France and all other member states who wish to have the sovereign right to impose digital taxation on companies in a fair way.”
France and several other European nations, including the UK, argue that big tech companies have not been paying fair levels of tax on profits generated in some of their biggest markets because they are able to divert those profits to tax havens.
Mr Le Maire, who says France will abolish its national digital tax as soon as an international minimum taxation level is agreed at the OECD, called the US sanctions plan “unfriendly, inappropriate and illegitimate” and said France would react and take its case to the World Trade Organization if the new tariffs were imposed.
“We would enter into a trade conflict between the United States and Europe,” said Mr Le Maire. “Is that what we want? No one wants there to be a trade conflict . . . It’s not even a French problem, it’s a more general problem between the US and Europe.”
At the end of last year, the US reversed its previous stance on the multilateral negotiations at the OECD, with Mr Mnuchin saying the US had “serious concerns” about plans about a proposed new system of international corporate taxation.
Paolo Gentiloni, the EU’s economy commissioner, responded to the US move by saying the bloc would be ready to revive its own plans — originally pushed by France but ultimately foiled by a few member states — for an EU-wide digital tax if the OECD talks failed.