France Tells US to ‘Come to Its Senses’ on Digital Tax

PARIS (AFP) — Finance Minister Bruno Le Maire urged the United States Monday to renounce threatened sanctions on France in a dispute over taxation of tech giants, and warned of possible EU retaliation.

“This trade war is in no one’s interest and I call on our American friends to display wisdom, to return to their senses,” Le Maire told France Inter radio as the U.S. government moves towards imposing sanctions.

President Trump in December threatened to punish Paris for a new tax on tech giants such as Netflix and Amazon, unveiling sky-high retaliatory duties on $2.4 billion of French wines, makeup and leather handbags.

U.S. trade officials are accepting written comments until Monday and on Tuesday are to hold a public hearing to allow people and companies to comment on the punitive measures.

Le Maire warned that France would respond if the tariffs are put into place.

“If the Americans decide to go through with it, to put into place sanctions against the tech tax when they are for such a tax … in that case we will retaliate,” he said. He planned to speak with his U.S. counterpart Steven Mnuchin later in the day.

Le Maire said he would also meet with EU Trade Commissioner Phil Hogan on Tuesday and ”we’ll study the possibility of commercial retaliation.”

Le Maire also wrote to U.S. Trade Representative Robert Lighthizer to urge him not to impose sanctions on France.

“I insist that our tax is not discriminatory against U.S. companies,” said the letter, a copy of which was obtained by Agence France-Presse.

France last year approved a new levy on tech firms as international efforts dragged on to find a new model to tax their revenues earned via online sales and advertising.

Tech companies often pay little in many countries owing to their lack of physical presence.

The levy would have such firms pay up to 3% of their revenue earned in France.

Washington claims that U.S. companies such as Google, Apple, Facebook and Amazon have been singled out by the French tax.

In August, France agreed to refund any taxes collected in excess of the yet-to-be-decided international formula.

But as proposals for digital services taxation gain popularity around the world, Washington has been left to pound the table ever harder.

The Trump administration could impose duties of up to 100% of the value of French imports, including such emblematic goods as Champagne and camembert.

Le Maire called on the United States to seek a global solution to the problem of firms generating massive revenue with online sales and paying little in taxes via negotiations underway at the Organization for Economic Co-operation and Development.

After blocking the OECD talks for several years, the U.S. relaunched them last year only to make proposals in December which France has rejected and have cast doubt on the goal of reaching a global deal this year.

Le Maire urged Washington “to work towards a compromise at the OECD to avoid extreme situations that benefit no one.”

If the United States follows through with its threat it, will be the second time that France has been hit, as in mid-October Washington imposed sanctions after a long legal battle over European subsidies to aircraft manufacturer Airbus.

The sanctions saw 10% punitive tariffs imposed on EU aircraft and 25% on a variety of food products, including French wine.

© Agence France-Presse

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