January 17, 2020 / 10:43 AM / in 7 months

France tells U.S.: back a global digital tax or risk others going solo

PARIS (Reuters) - The United States risks a proliferation of national taxes on tech giants if President Donald Trump rejects new international rules for taxing digital companies at next week’s World Economic Forum, the French government said on Friday.

FILE PHOTO: Bottles of Champagne displayed in Paris, a product the U.S. has threatened to impose tariffs on in retaliation for a French tax on digital companies. REUTERS/Benoit Tessier/File Photo

Finance Minister Bruno Le Maire wants a U.S. commitment in Davos to the international tax reform and is also pressing Washington to lift a threat of tariffs on French champagne, cheese and luxury handbags made in retaliation against France’s own digital tax.

Agreement was close on a universal tax proposal drawn up by the Organization for Economic Cooperation and Development, Le Maire said, but Washington needed to take the “last step” to reach a compromise.

“The proposal on the table is the right solution. We are not far from agreement,” Le Maire told reporters after talks with OECD chief Angel Gurria. “We are asking our American friends to take the last step in the coming days.”

Washington has threatened to impose duties of up to 100% on French products worth $2.4 billion after a U.S. government investigation found the French tax would harm American technology companies.

France last year applied a 3% levy on revenue from digital services earned in France by companies with revenues of more than 25 million euros ($27.78 million) in France and 750 million euros worldwide.

Trump says it unfairly targets U.S. companies, a charge Paris rejects.

His administration has said that an overhaul of decades-old international tax rules must have a clause making it optional for U.S. companies. Le Maire rejected that possibility, calling it a “non-starter”, and urged Washington to back the OECD proposal as is.

Gurria echoed Le Maire and said the alternatives to a thorough rewriting of international tax rules were unworkable.

“A multiplication of tax regimes, a multiplication of systems, a multiplication of taxes, each with different rates and approaches, would really be unmanageable,” Gurria said.

Reporting by Dominique Vidalon and Leigh Thomas; Writing by Richard Lough; editing by Kevin Liffey, Larry King

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