French show defiance to White House on digital tax

A French-U.S. clash over digital taxation overshadowed the start of a Group of Seven finance chiefs meeting as France refused to flinch on its plan to impose levies that will hit American tech giants.

Just before an encounter with U.S. Treasury Secretary Steven Mnuchin at the G-7 near Paris, French Finance Minister Bruno Le Maire pledged to forge ahead with a 3% levy on digital revenues of large companies. France hopes its drive will pressure the U.S. to be more constructive in talks at the Organization for Economic Cooperation Develop to develop a similar tax on profits in 129 countries.

“We will make every effort to get an agreement on digital tax here at the G-7 and open the path to a solution in 2020 at the OECD,” Le Maire told reporters. “It will be difficult, I know the U.S. position

has toughened recently.”

Le Maire’s defiance is likely to meet with a chilly response from U.S. President Donald Trump’s administration. According to a report on Wednesday in Spanish newspaper El Mundo, the U.S. State Department has sent letters to embassies in several countries, including Spain, ordering them to alert governments

that retaliation will follow if they go down the same path as France.

“A great number of countries are now taking this line — the U.K. has moved forward, Austria wants to do it,” Spanish Economy Minister Nadia Calvino said about the potential of digital taxation, speaking to Cadena Ser radio. “At the European level, practically all of us are in agreement.”

If France and the U.S. fail to resolve their differences in Chantilly, it could derail any effort to tax tech giants.