France puts off tax hikes for ma­jor tech­nol­ogy

Antelope Valley Press - - FRONT PAGE - By PAN PY­LAS and JAMEY KEATEN

DAVOS, Switzer­land — France will de­lay its tax on big tech firms like Google and Face­book in ex­change for the United States’s prom­ise to hold off re­tal­ia­tory tar­iffs — a po­ten­tial sign of good­will in the U.S. and Euro­pean Union’s in­creas­ingly tense re­la­tions over trade.

Af­ter U.S. Pres­i­dent Don­ald Trump threat­ened the E.U. with big­ger tar­iffs, French Fi­nance Min­is­ter Bruno Le Maire said Wed­nes­day he had ne­go­ti­ated a truce with U.S. Trea­sury chief Steven Mnuchin on the side­lines of the World Eco­nomic Fo­rum in Davos, Switzer­land.

Le Maire said France would de­lay col­lec­tion of the dig­i­tal tax un­til De­cem­ber, park­ing the is­sue un­til af­ter the next U.S. pres­i­den­tial elec­tion where Trump hopes to se­cure another fouryear term.

The 3% tax on the rev­enues of big in­ter­net companies only came into force last July and prompted out­rage in the U.S., which launched re­tal­ia­tory tar­iffs against French wine, cheese and other prod­ucts.

The two coun­tries even­tu­ally agreed a month later to try to cre­ate an in­ter­na­tional agree­ment on how to tax dig­i­tal busi­ness by mid-2020, but nei­ther side would back off their puni­tive taxes. They agreed to on Wed­nes­day in Davos.

Le Maire, Mnuchin and the head of the Paris-based Or­ga­ni­za­tion

or Eco­nomic Co-op­er­a­tion and De­vel­op­ment, José Án­gel Gur­ría, will meet Thurs­day to work on an in­ter­na­tional ap­proach to taxes on dig­i­tal companies.

“I ab­so­lutely ex­pect we will come to a so­lu­tion be­cause there is no plan B,” Gur­ría told The Associated Press ear­lier in Davos.

It re­mains un­clear whether they can find an in­ter­na­tional agree­ment, as it would in­volve dozens of coun­tries with of­ten con­flict­ing views.

Le Maire said France was not in a po­si­tion to scrap its tax un­til such an in­ter­na­tional ac­cord has been reached and in­sisted that companies reliant on in­ter­net busi­ness need to pay taxes wher­ever they are based and wher­ever they op­er­ate.

The French mea­sure is an at­tempt to get around tax avoid­ance mea­sures by multi­na­tion­als, which pay most of their taxes in the E.U. coun­try they are based in — of­ten at very low rates. That ef­fec­tively means the companies pay next to no tax in coun­tries where they have large op­er­a­tions.

“Dig­i­tal companies will pay their fair tax in 2020,” Le Maire told re­porters in Davos.

At face value, the deal ap­pears to dial down the risk of a wider trade war be­tween the U.S. and the E.U., of which France is part of.

How­ever, Trump and Mnuchin both took a no­tice­ably tough line on the E.U. that stoked con­cerns that the months ahead could see a new es­ca­la­tion in trade ten­sions.

Trump, who last week reached an in­terim trade deal with China eas­ing ten­sions be­tween the world’s two big­gest economies, ratch­eted up his crit­i­cism of the E.U. and said its ap­proach to trade was in fact worse than Bei­jing’s.


French Fi­nance Min­is­ter Bruno Le Maire (left) and Euro­pean Trade Com­mis­sioner Phil Ho­gan at­tend a me­dia con­fer­ence af­ter their meet­ing Tues­day in Paris.

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