Published On: Wed, Aug 28th, 2019

Macron compromise to Trump on French digital tax is a disgrace says Le Pen ally  | World | News

Mr Rachline, mayor of the southern French town of Fréjus and a member of Marine Le Pen’s far-right inner circle on Twitter said: “Macron is piteously submitting to US interests by backtracking on the digital services tax. What a disgrace!” Mr Trump had threatened to hit back with tariff action after France passed a law imposing a 3 percent tax on revenues earned on digital services in France. However, the compromise struck between French Finance Minister Bruno Le Maire, US Treasury Secretary Steven Mnuchin and Mr Trump’s economic adviser Larry Kudlow states that companies will be able to deduct the amount once a new international deal on how to tax internet companies is found in 2020.

Mr Macron said in a joint press conference with the US leader earlier on Monday: “We’ve done a lot of work on the bilateral basis, we have a deal to overcome the difficulties between us.”

The three percent levy applies to revenue from digital services by firms with more than £22.6million (€25 million) in French revenue and £68million (€750million) worldwide. 

Washington recently launched an investigation into the French tax, with senior Trump officials saying it unfairly targeted US companies like Facebook, Google, Amazon and Apple.

The tech giants are currently able to book profit in low-tax EU countries such as Ireland and Luxembourg, no matter where the revenue originates. 

Last month, Mr Trump lashed out at Mr Macron’s “foolishness” for moving ahead with the levy, and threatened to tax French wines in retaliation.

Shortly before the compromise was reached, he said that while he was “not a big fan” of tech companies, they were “great American companies and frankly I don’t want France going out and taxing” them.

He added: “And if they do that … we’ll be taxing their wine like they’ve never seen before.”

While the two leaders have evidently buried the hatchet over the tech tax, Mr Trump declined to say whether his threat of a retaliatory wine tariff was now off the table, joking about his wife Melania’s “love” for French wine instead. 

A US trade group representing technology giants has also denounced the tax compromise.

The Computer & Communications Industry Association (CCIA) – which represents Google, Amazon and Facebook – blasted the French levy as “unjustified,” adding that it would pave the way for more “discriminatory taxes”.

CCIA president Ed Black said in a statement: “France’s unilateral digital tax action aimed at leading American companies is unjustified, and if tolerated, will encourage other countries to follow their example.

“We should not support a compromise that would green-light discriminatory taxes against US tech companies for some vague promise of possible partial reimbursement years later.”

Mr Macron, a former economy minister, pushed hard last year for a digital tax to cover EU member states, but faced resistance from other countries.

He decided to go ahead with a national tax, which was signed into law in July and applies retroactively from January 1, 2019. 

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