French Finance Minister Bruno Le Maire said on Saturday that the country would proceed with taxing revenues of big technology firms and urged the United States not to bring trade tariffs into the debate on how to fairly raise levies on digital services.
Le Maire was responding to US President Donald Trump’s threat to tax French wines in retaliation for France’s digital services tax, which he says unjustly targets US companies.
“It’s in our interest to have a fair digital tax,” Le Maire told reporters, speaking in English. “Please do not mix the two issues. The key question now is how we can we get consensus on fair taxation of digital activities.”
Two weeks ago, the French Senate approved the 3% levy that will apply to revenue from digital services earned in France by companies with more than 25 million euros in French revenue and 750 million euros worldwide.
Other European Union countries, including Austria, Britain, Spain and Italy, have also announced plans for their own digital taxes.
Trump blasted Macron’s “foolishness” for pressing ahead with the French levy and warned his administration would announce “substantial reciprocal action”.
“If anybody taxes them, it should be their home Country, the USA. We will announce a substantial reciprocal action on Macron’s foolishness shortly,” Trump tweeted on Friday. “I’ve always said American wine is better than French wine!”
Later in the Oval Office, Trump told reporters the tax decision was wrong and he threatened the key French export.
“They shouldn’t have done this,” Trump said. “I told them, I said, ‘Don’t do it because if you do it, I’m going to tax your wine.'”
Le Maire reiterated Macron’s assurance that France would lift its national digital tax if there was a deal on a universal tax at the level of the Organisation for Economic Co-operation and Development (OECD).
He added that France wanted leaders of the G7 group of nations to agree on the principle of universal taxation of digital activities at next month’s summit in the coastal resort of Biarritz.
The United States is by far the largest single export market for French wine and spirits, which is France’s second-biggest export after aerospace. The United States in 2018 accounted for nearly a quarter of all French wine exports, or 3.2 billion euros’ worth.
Earlier this month, the United States threatened tariffs on an additional $4 billion worth of European Union goods, including wine, cheese and whiskey – that could be hit with tariffs as part of a nearly 15-year-long dispute at the World Trade Organization over aircraft subsidies given to US planemaker Boeing Co and its European rival, Airbus SE.