France hopes to put an end to digital tax spat

In July, France decided to apply 3% levy on digital firms

Paris, Jan. 20: French economy minister Bruno Le Maire said he hoped to resolve a row with the United States over a planned French digital tax by Wednesday evening of this week.

“We are ready to make steps toward the United States, and we have already proposed a certain number of measures. We hope to reach a resolution by Wednesday,” Le Maire told LCI television on Monday, adding he would meet U.S. counterparts at the Davos World Economic forum in Switzerland this week.

France decided in July to apply a 3 per cent levy on revenue from digital services earned in France by firms with revenues of more than 25 million euros ($28 million) in France and 750 million euros worldwide. Washington has threatened to impose taxes on key French products in response.

Last week, the French government said the US risked a proliferation of

national taxes on tech giants if President Donald Trump rejected new international rules for taxing digital companies at the World Economic Forum.

Le Maire wants a U.S. commitment in Davos to the international tax reform and is also pressing Washington to lift a threat of tariffs on French champagne, cheese and luxury handbags made in retaliation for France’s own digital tax.

Agreement was close on a universal tax proposal drawn up by the Organisation for Economic Cooperation and Development, Le Maire said, but Washington needed to take the “last step” to reach a compromise.

The US sanctions “would be a terrible blow for French viticulture,” said Le Maire, adding he had spent most of the weekend in negotiations and was due to meet US Treasury Secretary Steven Mnuchin again on Monday evening.

The minister said France would “certainly not” give in to pressure to reduce to “nearly nothing” the three-percent tax France imposed on multinational tech giants' turnover from January 1 last year, pending the adoption of an international tax regime under the Organisation for Economic Cooperation and Development (OECD).

“What I am trying to make our American friends understand is that the fight is not between France and the US or between Europe and the US, the fight is to put in place a fair tax on digital activities,” insisted Le Maire. After blocking the tech tax talks at the OECD for several years, Washington relaunched them last year only to make proposals in December which France rejected before going ahead with its tax.