Finance Minister Bruno Le Maire said on Saturday that France would proceed with taxing revenues of big technology firms and urged the United States not to bring trade tariffs into the debate on how to fairly raise levies on digital services. Le Maire was responding to US President Donald Trump’s threat to tax French wines in retaliation for France’s digital services tax, which he says unjustly targets US companies.
It’s in our interest to have a fair digital tax, Le Maire told reporters, speaking in English. Please do not mix the two issues. The key question now is how we can we get consensus on fair taxation of digital activities. Two weeks ago, the French Senate approved the 3% levy that will apply to revenue from digital services earned in France by companies with more than 25 million euros ($27.8 million) in French revenue and 750 million euros worldwide.
Other European Union countries, including Austria, Britain, Spain and Italy, have also announced plans for their own digital taxes. Trump blasted Macron’s foolishness for pressing ahead with the French levy and warned his administration would announce substantial reciprocal action. They shouldn’t have done this, Trump told reporters on Friday. I told them, I said, ‘Don’t do it because if you do it, I’m going to tax your wine.
Le Maire reiterated Macron’s assurance that France would lift its national digital tax if there was a deal on a universal tax at the level of the Organisation for Economic Co-operation and Development (OECD). He added that France wanted leaders of the G7 group of nations to agree on the principle of universal taxation of digital activities at next month’s summit in the coastal resort of Biarritz.
Le Maire said that a digital tax on internet giants was a national decision that the government would enact, defying a US threat of substantial reciprocal action. The taxation of digital activities is a challenge that concerns all of us. We want to reach an agreement on this issue in the framework of the G7 and the OECD, said Le Maire.
The French Parliament passed a new law to tax digital giants on July 11, making France one of the first countries to tax GAFA companies, namely Google, Amazon, Facebook and Apple. If anybody taxes them, it should be their home Country, the USA, US President Donald Trump tweeted on Friday.
We will announce a substantial reciprocal action on Macron’s foolishness shortly. I’ve always said American wine is better than French wine. mIn 2018, French exports to the US amounted to 52 billion dollars, according to the data by the US Census Bureau.
The French Digital Services Tax proposed a 3-percent tax on technology companies providing certain digital services to French users with total annual revenues of at least 750 million euros (834 million dollars) globally and 25 million euros in France.
The tax was adopted by France’s National Assembly, the lower house of parliament, on July 4. It is expected to collect 400 million euros this year and 650 million euros by 2022. In response, the US Trade Representative (USTR) initiated an investigation on July 10 against France under Section 301 of the Trade Act of 1974, accusing the French government of unfairly targeting the tax at certain US-based technology companies.
Section 301 is part of a US trade law adopted in 1974 that allows the US president to unilaterally impose tariffs or other trade restrictions on foreign countries. The United States will hold a public hearing on August 19 following the investigation, allowing the public to submit comments on any reciprocal action.