Spotlight on U.S. objections to France’s controversial tech tax

Trump administration is objecting to France’s plan to tax Facebook, Google and other U.S. tech giants, a rift that’s overshadowing discussions between seven longtime allies this week on issues ranging from digital currencies to trade.

As finance ministers from the Group of Seven rich democracies gathered Wednesday for a two-day summit at a chateau in Chantilly, near Paris, U.S. Treasury Secretary Steven Mnuchin planned to take a tough line against host France.

He was going to object to France’s proposed 3 percent tax on revenues of large tech companies with French Finance Minister Bruno Le Maire, according to a senior U.S. Treasury official.

The controversial tax, which the French parliament passed days ago and could be signed into law within weeks, has already provoked a strong rebuke from the White House, which said it could lead to U.S. tariffs on French imports.

The rift risks feeding into broader disagreements, including on trade, after the U.S. imposed tariffs on some EU goods last year, drawing retaliation from Europe.

“We are very disappointed that France has passed a unilateral service tax,” said the Treasury official, who said Mnuchin was to raise the issue during a bilateral meeting with Le Maire. The official spoke on condition of anonymity.

French officials have indicated their national digital tax — the first of its kind, and created without any EU-wide agreement on the issue — is intended to spur an international agreement during the G7 summit. They said it will be withdrawn if a global deal is forged, a gamble that could provide negotiating leverage with the U.S.

The regulation of technology companies is emerging as a major issue around the world.