France not on ‘crusade’ against U.S. with digital tax: finance minister

BUCHAREST (Reuters) – France is not specifically targeting U.S. internet giants with a planned tax on digital service companies, its finance minister said in an interview, pushing back against pressure from Washington to drop the levy.

FILE PHOTO: French Economy Minister Bruno Le Maire arrives for an event at the Louvre Carrousel in Paris, February 20, 2019. Ludovic Marin/Pool via REUTERS/File Photo

The U.S. State Department said Secretary of State Mike Pompeo urged France in a meeting with his French counterpart Jean-Yves Le Drian on Thursday not to approve the digital services tax, saying it would hurt U.S. technology firms.

“France is not leading a crusade against the United States. The United States are an ally and a friend of France. France is leading a crusade against tax injustice – it’s not the same thing,” Finance Minister Bruno Le Maire told Reuters.

Speaking in Bucharest where he was attending a meeting with EU counterparts, he added that France was far from alone in Europe in its support for creating minimum taxation of digital service companies, with Austria, Britain, Spain and Italy also pressing ahead with own plans

The emergence of internet giants such as Google, Facebook and Amazon has pushed international tax rules to the limit because they are able to book profits in low-tax countries rather than where the customer is located.

The U.S. Treasury’s top international tax official, Chip Harter, said last month in Paris that such taxes were potentially “discriminatory” and said Washington was looking into whether it could retaliate under WTO rules and trade treaties.

Washington has said that it is better to pursue broader international tax reform at the Organization for Economic Co-operation & Development (OECD).

France also firmly supports work at the OECD to update decades-old international tax rules to take better account of the digital era and has promised to drop the French tax when there is a global deal.

“I call on our American friends and partners to step up work at the OECD so that we can reach as quickly as possibly – in 2020 I hope – an international solution,” Le Maire said.

The OECD aims to have a outline for an international deal by mid year, which will all countries to work out the technical details in time for a global accord to be signed in 2020.

Reporting by Leigh Thomas; Editing by Hugh Lawson

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