Winemakers nervous as France moves forward on tech tax

PARIS — France is pushing ahead with a landmark tax on tech companies like Google and Facebook despite U.S. President Donald Trump’s threats of retaliatory tariffs on French wine.

That’s rattling French vintners, who sold $1.78 billion worth of wine last year to American consumers. But neither Trump nor French President Emmanuel Macron appears ready to back down.

After Trump slammed the “foolishness” of the tax in a tweet Friday and promised reciprocal action, French Finance Minister Bruno Le Maire said France will implement it anyway.

He insisted that the measure doesn’t target American companies and that “fair and effective taxation on digital activities” is of universal concern. He said France’s tax is meant as a temporary measure pending negotiations on an international deal that France wants to work out “hand in hand with our American friends.”

The 3 percent tax, which went into force this week, mainly concerns companies that use consumer data to sell online advertising.

It’s designed to stop multinationals from avoiding taxes by setting up European headquarters in low-tax European Union countries. Companies such as Google, Amazon, Facebook, Apple, Airbnb and Uber pay very little tax on their significant business in countries like France.

The Trump administration says the tax is discriminatory against U.S. business.

In fact, it targets any digital company with yearly global sales worth more than $835 million and French revenue exceeding $27 million. It should affect about 30 companies, based in the U.S, China and Europe — including France.

The revenue threshold is supposed to allow more room for startups. France argues that tech companies are abusing their market dominance, notably through tax avoidance, and preventing others from a fair chance of competing.

U.S. Trade Representative Robert Lighthizer began an investigation this month to determine if the tax is discriminatory or unreasonable and restricts U.S. commerce.

France failed to persuade EU partners to impose a Europe-wide tax on tech giants but is now pushing for an international deal on it with the G-7 and the 34 countries of the Organization for Economic Cooperation and Development.