Tuesday, 29 September, 2020

Emmanuel Macron extends digital tax talks after phone call with Trump

Trump and Macron on Dec. 3 Macron and Trump on Dec. 3 2019
Deanna Wagner | 24 January, 2020, 11:56

Global tech giants including Google, Apple, Facebook and Amazon would have been due to make tax payments equivalent to 3% of their French revenues in April and then again in November.

French Finance Minister Bruno Le Maire said France had reached an agreement with the U.S. on the basis for future talks over a global digital tax, at the Organisation for Economic Development (OECD) level.

French Finance Minister Bruno Le Maire later told reporters in Brussels that there was now "an agreement" between the United States and France "to avoid any tariff escalation and avoid any trade war".

In a tweet following talks between the two leaders, Macron praised a "great discussion on digital tax" and announced: "we will work together on a good agreement to avoid tariff escalation".

France and the USA will try to settle their dispute over the French digital tax in 15 days to avoid further tariffs, French Finance minister Bruno Le Maire said on Tuesday (7 January). "Excellent!" Trump replied on the social media platform.

But France said it will collect all the taxes retrospectively early next year if the OECD fails to reach a deal on a digital tax.

How long that resistance against the US can last amid the threat of retaliatory tariffs on Europe's lucrative (and vulnerable) auto industry is yet to be seen.

Companies above the threshold must pay a 3 percent tax. The U.S. Trade Representative's office said last month the French tax was "inconsistent with prevailing principles of worldwide tax policy, and is unusually burdensome for affected U.S. companies", including Alphabet Inc's Google, Facebook Inc, Apple Inc and Amazon.com Inc.

The Trump administration, arguing that the new law was an unfair levy on American companies, threatened to respond with $2.4 billion worth of tariffs on cheese, wine, champagne and other French products. However, a full-blown trade war between the U.S. and EU would likely have an even larger impact to global trade with the European Union ranking above China as a trade market for the US.

On January 7, Paris and Washington had given themselves 15 days to reach a deal to avert the U.S. threat of duties on up to $2.4 billion of French goods.

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"We have reached agreement. on a joint global framework", Le Maire said after talks with US Treasury Secretary Steven Mnuchin at the World Economic Forum in Davos.

On Wednesday, U.K. Finance Minister Sajid Javid had told CNBC that the U.K. would go ahead with its own digital services tax in April, but that it too was ready to subsume that to an global deal. But he cautioned that discussions on finding a compromise "remain hard".

"I think that we have a lot in common and a lot to work for".

Le Maire said last month that France would be willing to let the World Trade Organisation decide on the US' proposed sanctions. "I am not going to get into the details of the negotiation".

"Sounds like a fairly healthy relationship to me", Hogan said Thursday in the US capital.

The U.K. and Italy have signaled that their own tax plans were either temporary or in lieu of an worldwide solution led by the OECD.

In Brussels, the industry's lobby group, the Computer & Communications Industry Association, hailed the move. On Wednesday, Mnuchin told a CNBC-moderated panel in Davos that the USA would retaliate against "arbitrary" and "discriminatory" digital taxes.

But, he said the OECD needed to lead the creation of an worldwide framework for digital taxation that was fair. Since then President Trump has also threatened the European Union with auto tariffs but stated at the economic forum in Davos that "We expect to be able to make a deal with Europe".

After France announced its tax previous year, both Italy and Britain unveiled similar plans. The ceasefire on tariffs will continue until the end of the year according to a French ministry of finance official.