France Pushes Back Against U.S. Over Digital Tax Probes

(Bloomberg) -- France slammed the U.S. over its probe into digital taxes that are being considered by a number of countries, saying it contradicts Washington's call for unity among leading economies.

“There is a real contradiction between the U.S. demanding unity within the Group of Seven -- which we support -- and the possibility of new trade sanctions,” French Finance Minister Bruno Le Maire said after a G-7 telephone conference Wednesday.

The French and U.S. government agreed a truce earlier this year in a dispute over France's digital services tax, according to which Washington is holding back on sanctions and Paris is suspending the collection of its levy. France will resume collecting the tax at the end of the year unless there is an agreement in talks at the OECD on new global tax rules.

On Tuesday, the Trump administration started investigations into digital services taxes considered by several trading partners from the European Union to India. A similar investigation into France's tax led to the threat of tariffs.

“We won't give up on anything on digital tax,” Le Maire said. “I've called on the states of the G-7 to accelerate work at the OECD to get an international solution by the end of 2020.”

International Deal

Officials said other European finance chiefs participating in the G-7 teleconference were less confrontational, but also said it is important to get an international agreement on digital tax.

“The #digitaltax is the right answer to the request for fair and equal tax treatment between traditional and digital companies -- the only ones that have not suffered from the tremendous impact of the crisis,” Italy's Finance Minister Roberto Gualtieri said in a message posted on Twitter.

Asked about the digital tax after the G-7 call, the U.K. Treasury declined to comment on specifics, but issued a statement saying its national tax is compatible with its international obligations.

“We have always been clear that our preference is for a global solution to the tax challenges posed by digitalization, and we'll continue to work with the US and other international partners to achieve that objective,” the Treasury said.