France vows to apply digital tax this year, calling U.S. pullout of talks "provocation"

Bruno Le Maire

PARIS, June 18 (Xinhua) -- France will apply taxes on digital giants this year "whatever happens," Economy and Finance Minister Bruno Le Maire said Thursday.

He called the U.S. decision "a provocation" to withdraw from the talks for a global deal on international taxation at the Organization for Economic Cooperation and Development (OECD).

"We have received, together with my Italian, Spanish and British counterparts, a letter from (U.S.) Secretary of the Treasury Steven Mnuchin which confirms that they will not continue with the negotiations on digital taxation at the OECD," Le Maire told France Inter radio.

"This letter is a provocation towards all the partners at the OECD when we were centimeters away from an agreement," he said, adding that the four countries have jointly responded to Washington that they wanted a deal at the OECD as soon as possible.

The minister stressed that France "will apply taxes on digital giants in 2020," recalling that the taxes "had never been withdrawn, but simply suspended for several months."

In July 2019, the French parliament adopted a digital tax bill, paving the way for the eurozone's second-largest power to unilaterally tax Internet giants by 3 percent on much of their digital sales in France.

Washington threatened to impose tariffs of up to 100 percent on 2.4 billion U.S. dollars' worth of French goods in retaliation for the tax that it deemed discriminatory.

The two countries agreed to delay the enaction of the tax bill and the imposition of tariffs, pending the OECD negotiations, which were supposed to conclude by the end of this year.

"Either the United States goes back on its position and we reach an agreement by the end of 2020 and it is international taxation that will apply ... or there is no agreement at the OECD because the United States is the only country to block, in which case we will apply our national tax," said Le Maire.

Earlier in June, the United States decided to launch a probe into digital services taxes that have been adopted or are considered by 10 U.S. trading partners, saying they unfairly target U.S. companies. The process could lead to U.S. tariffs on foreign countries.