Fri, Jul 19, 2019 - Page 10 News List

France defiant in US digital tax showdown


G7 finance ministers and central bank governors participate in a round-table meeting during a summit in Chantilly, France, on Wednesday.

Photo: Bloomberg

France on Wednesday said it would push ahead with its law to tax tech giants that has sparked a row with the US, saying that an international accord was the only way to solve the dispute.

French Minister of Finance Bruno Le Maire met US Secretary of the Treasury Steven Mnuchin on the sidelines of the meeting of G7 finance ministers in Chantilly outside Paris.

“We don’t always agree on all issues, but we do agree on many and it’s always important to listen to each other,” Le Maire tweeted.

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

The move has infuriated US President Donald Trump and Washington has announced an unprecedented probe against France that could trigger the imposition of tariffs.

In comments to France Inter radio, Le Maire said France would not back down on its plans to impose the 3 percent tax on revenue.

He said he would make it clear that the French parliament had approved the tax and this could only be withdrawn if there was an international agreement.

“The possibility of US sanctions against France exists,” 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 probe into the measure.

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

However, 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 Co-operation and Development.

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

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

Britain unveiled legislation last week and Spain’s new government is expected to introduce its own version.

However, smaller EU states such as Ireland and Luxembourg — low-tax countries which host the European headquarters of the digital giants — have prevented a consensus in the EU.

German Minister of Finance Olaf Scholz said he hoped that next year there could be international rules in place that “we can introduce everywhere, including in the EU and Germany.”

Plans by Facebook to launch a virtual currency called Libra have also stoked concerns among regulators in numerous countries about regulation and market oversight of cryptocurrencies.

Le Maire said the conditions were not yet in place to launch Libra, a virtual currency to be backed with a basket of real-world currencies that Facebook says would facilitate online financial transactions.

After the first day of meetings, a French official said there was a “shared consensus” at the G7 about the need for action on Libra.

“Concerns [were] expressed by all the participants about the current situation and the need to act quickly,” the official added.

Scholz said the ministers and central bankers present had “serious concerns” about the implications.

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