Talks on tech tax with U.S. still difficult: France’s Le Maire

BRUSSELS (Reuters) – Talks between France and the United States on taxing digital companies “remained difficult”, French Finance Minister Bruno Le Maire said on Tuesday, despite a pledge by the two countries to avoid a trade war until at least the end of this year.

Le Maire said France’s target was still to impose a minimum tax rate on companies that at the moment pay no levies or too little, in line with a proposal put forward last year by the Organisation for the Economic Cooperation and Development (OECD).

As talks at international level failed to make quick progress, France decided in July to apply a 3% levy on revenue from digital services earned in France by firms with revenues of more than 25 million euros ($28 million) in France and 750 million euros worldwide.

As many of those firms are U.S. companies, Washington has threatened to impose taxes on key French products in response. The U.S. Trade Representative’s office said last month the French tax was “inconsistent with prevailing principles of international tax policy, and is unusually burdensome for affected U.S. companies,” including Alphabet Inc’s Google, Facebook Inc, Apple Inc and Inc.

But in a surprise move on Monday, French President Emmanuel Macron said he had a “great discussion” with U.S. President Donald Trump over the issue and said the two countries would work together to avoid a rise in tariffs until the end of 2020.

Le Maire said the truce agreed by the two presidents was a “very positive starting point” but now Paris and Washington had to reach a compromise on how to tax digital activities at global level.

He said he would discuss details of a possible “definitive” deal with U.S. Treasury Secretary Steve Mnuchin on Wednesday at the World Economic Forum in Davos, Switzerland.

“It remains a difficult negotiation. The devil is in the details, and on many details we still need to find a common ground, but I think we are moving in the right direction,” Le Maire said in Brussels before a meeting of EU finance ministers where the EU’s stance on digital taxation will be discussed.

France’s objectives in the talks remained to reach a “fair taxation of digital companies and minimum taxation at international level,” Le Maire added.

(Reporting by Francesco Guarascio @fraguarascio; Editing by Alison Williams and Susan Fenton)