France defiant as digital tax showdown with US looms

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People walk past an Apple store in New York, the United States, Aug. 2, 2018. U.S. tech giant Apple became the first American company that saw its market cap hit 1 trillion U.S. dollars in the U.S. history after its shares rose 2.8 percent to a session high of 207.05 dollars around midday trading on Thursday. (Xinhua/Wang Ying)

(AFP) – France yesterday expressed defiance in a row with the United States over taxing tech giants that threatens to dominate a G7 meeting, saying an international accord was the only way to solve the dispute.

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French Finance Minister Bruno Le Maire was set to meet Treasury Secretary Steven Mnuchin on the sidelines of the meeting of finance ministers from the world’s seven most developed economies in Chantilly outside Paris. But there was no early sign of any compromise.

The French parliament earlier this month passed a new law that will tax digital giants on revenue accrued inside the country, even if their European headquarters are elsewhere, in a move that will affect US groups Google, Apple, Facebook and Amazon.

The move infuriated the United States which announced an unprecedented probe against France which could trigger the imposition of tariffs.

“It is going to be difficult, I know. The American position has hardened recently,” said Mr Le Maire ahead of his meeting with Mr Mnuchin, which was pushed back due to the US official’s delayed flight.

Mr Le Maire said he would make clear that the French parliament had agreed the tax and this could only be withdrawn if there was an international agreement.

In comments to France Inter radio, Le Maire said France would not back down with its plans to impose a three-percent tax on revenue that tech firms earn from French sales, despite the threat of US retaliation.

“The possibility of US sanctions against France exists,” Mr Le Maire said. “There is a legal instrument for that and clearly there is the political will.”

Even before the final vote by French lawmakers, the US announced it was opening a so-called Section 301 investigation into the measure.

A Section 301 investigation was used by the Trump administration to justify tariffs on China.

But Mr Le Maire said: “France will not back down on the introduction of its national tax. It was decided upon, it was voted upon, it will be applied from 2019.”

The minister had late Tuesday expressed confidence that the G7 could find a consensus for an international accord which would be overseen by the Organisation for Economic Cooperation and Development (OECD).

“This would be the best way to solve this problem,” said Mr Le Maire.

France became the first major economy to pass such tax legislation last week when parliament gave its final approval.

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