France wants a solution for US dispute on digital tax within 15 days

France wants a solution for US dispute on digital tax within 15 days

US President Donald Trump (L) and French President Emmanuel Macron (R) meets ahead of a working lunch, at the US ambassador’s residence, on the sidelines of the NATO (North Atlantic Treaty Organization) summit, in Brussels, on May 25, 2017.

Mandel Ngan | AFP | Getty Images

France and the United States have given themselves 15 days to settle a dispute over the taxation of digital companies, French Finance Minister Bruno Le Maire said Tuesday.

Both countries have been at odds over a French decision to impose a 3% tax on sales generated by tech firms in the European country. Paris is of the opinion that tech giants pay too little or no corporate tax where they do not have a large physical presence. However, the United States has argued that the digital tax unfairly discriminates against U.S. firms, such as Google and Facebook, and has threatened to impose tariffs of up to 100% on French imports.

Le Maire spoke with U.S. Treasury Secretary Steven Mnuchin Monday over the phone, with the French minister telling reporters Tuesday they had agreed “to try to find a compromise about digital taxation within the OECD (Organization for Economic Co-operation and Development).”

“We have given ourselves exactly 15 days,” he said.

The French finance chief is due to meet Mnuchin at the World Economic Forum in Davos, Switzerland, at the end of the 15-day deadline.

During this period, France should not be subject to tariffs, Le Maire also said Tuesday. U.S. tariffs could target $2.4 billion of French products, including key exporting goods such as cheese, wine and luxury handbags.

“I think a full agreement is unlikely in the next couple of weeks, even though the OECD has been working on the issue for several months,” Dexter Thillien, a senior industry analyst at Fitch Solutions, told CNBC Tuesday via email.

“However, it’s possible that an overall framework can be agreed and announced at Davos, with the details being finalized over the coming weeks and months,” he added.

The OECD has been working toward an international framework to tax digital companies. The French government has argued that it will revoke its own digital tax once there is an agreement at an international level.

The current conflict between Washington and Paris could become a wider EU battle. Italy has also implemented a tax on digital companies, and countries such as the U.K. and Austria are also looking at applying a similar duty.

Speaking alongside Le Maire in Paris, the EU’s new trade chief, Phil Hogan said: “We are certainly very concerned about the threat from the United States of imposing tariffs.”

“The European Commission will stand together with France and all other member states who wish to have the sovereign right to impose digital taxation of companies in a fair way,” Hogan, who will be meeting his U.S. counterpart next week, also said.

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