French President Emmanuel Macron on Monday said that G7 members had reached an agreement on the taxation of tech giants, a long-standing subject of friction between France and the US, which has threatened to retaliate with tariffs on French wines.
Speaking alongside US President Donald Trump at a G7 summit in southwest France, Macron admitted that there had been “a lot of nervousness” about France’s new tax on tech behemoths, such as Alphabet Inc’s Google and Facebook Inc.
However, negotiations between France and the US had produced “what I think is a very good deal,” he said.
Macron said that France would scrap its own digital tax once a new international levy being discussed among 134 OECD countries is in place. France hopes it will be ready next year.
Asked whether he would now rescind his threat to slap punitive retaliatory tariffs on French wines, Trump, who had described the French tax as “very unfair,” was non-committal.
His wife Melania “loves the French wine,” he joked.
The US leader, who was elected on a protectionist platform, had earlier announced that Paris and Washington were “close” to a deal.
“They want to make a deal and we’ll see if we can make a deal,” Trump said.
The French parliament passed its new levy last month amid frustration at the slow pace of negotiations on a new global accord to ensure tech multinationals pay a larger share of taxes on their operations.
Under EU law, US tax giants can declare their profits from across the bloc in a single jurisdiction — in most cases low-tax jurisdictions such as Ireland or the Netherlands.
The French tax, which targets local sales rather than profits, has drawn accusations of discrimination from the so-called GAFA companies (Google, Apple Inc, Facebook and Amazon.com Inc).
It is expected to add 400 million euros (US$444 million) to France’s coffers this year, rising to 450 million euros next year.
Under the agreement struck in Biarritz, France, French tax authorities would look at how much companies paid in French “GAFA” taxes and how much they would have paid under the yet-to-be-decided international formula, French Minister of Finance Bruno Le Maire told reporters.
“Everything that is paid in excess compared to the international solution will be credited to the company,” he added.
The UK has also announced plans for a tax on tech giants, accused of exploiting fiscal rules to sharply cut their tax bills, despite soaring profits.
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