US and France still at odds over digital tax for Big Tech

Paris/Washington — France and the US will try to hammer out a compromise on the taxation of digital services over the next fortnight in a last-ditch effort to avoid an escalation in the transatlantic trade dispute.

“I had a long discussion with US treasury secretary Steven Mnuchin yesterday,” French finance minister Bruno le Maire told reporters in Paris on Tuesday. “We agreed to double our efforts in the coming days to try to find a compromise on digital taxation in the framework” of the Organisation for Economic Co-operation and Development (OECD), he said, adding that they had given themselves 15 days to strike a deal.

Last month, the US said it would hit $2.4bn of French products with tariffs in response to a 3% tax France instituted on the revenue of large tech companies including Google, Apple, Facebook and Amazon. The office of the US trade representative said the levy “discriminates against US companies” and the EU  has vowed to retaliate if the US follows through.

Le Maire said that he would pull out of negotiations if the Trump administration imposed the sanctions while talks were ongoing. The US tariffs will target goods that include Champagne, cheese and make-up.

Public hearing

Standing alongside Le Maire, the EU’s trade chief Phil Hogan said he is very concerned about the tariff threat because France’s digital tax is “legitimate”. The EU would consider “all possibilities” if Washington goes ahead, he said.

Representatives for French products, including Le Creuset cookware and Champagne producer Laurent-Perrier, will plead their case at the US trade representative on Tuesday. The tariffs could go into effect as soon as early this year.

The OECD is hoping to reach a consensus among more than 130 countries this year about how global digital companies should be taxed. France has said it will repeal its tax and refund the tax payments if an international agreement is reached. US officials have called that unacceptable and says the tax should be rescinded immediately.

The US has also said it will consider investigating digital taxes in other countries that have followed France’s lead — including Austria, Italy and Turkey. That could result in sanctions on products from those countries.

Bloomberg