France and US in trade row over digital tax

Dispute over revenues earned by tech firms could escalate to a full trade dispute

A row is brewing between France and the US over a digital services tax.

The French have claimed for some time that US digital companies do not pay sufficient tax on revenues earned in France. Last summer, Paris decided to apply a three per cent levy on revenue from digital services earned in France by firms with more than €25m (£21.3m, $28m) in French revenue and €750m worldwide.

But Washington has said it will respond to such a move by imposing duties of up to 100 per cent on imports of champagne, handbags and other French products worth $2.4bn (£1.8bn, €2.15bn) claiming the French tax would harm US tech companies.

The EU has said it will stand by France in the dispute, raising the stakes that the issue could degenerate into a full trade spat. French Economy Minister Bruno Le Maire warned the US that any retaliation to could damage relations. “If there were to be sanctions, we would immediately contact the WTO (World Trade Organisation)”, he added.

“If the US decided to impose trade sanctions against the EU over the French Digital Services Tax, it would deeply and durably affect the transatlantic relationship at a time when we need to stand united,” Le Maire told US trade negotiator Robert Lightizer, reports Reuters.

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He added that France is talking with the European Commission and other EU member states regarding options to defend EU trade rights.

Further Reading: Silicon Six accused of “aggressive tax avoidance”

Further Reading: France fines Google €150m for abusing its dominant position

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