French Finance Minister Bruno Le Maire and U.S. Treasury Secretary Steven Mnuchin are doubling down on efforts to reach an agreement over the European country’s digital tax on large tech firms, after the Trump administration said it unfairly targets U.S. companies and threatened to levy a 100 per cent tariff on French wine and other products. The leaders will meet at the World Economic Forum in Davos later this month, where they plan to settle the dispute if they haven’t by then. (Financial Times)
Talking point: Some French companies have warned the new sanctions would make them unsustainable in the U.S., and Le Maire, who called the sanctions “unfriendly, inappropriate and illegitimate,” said France will dispute the sanctions with the World Trade Organization if the U.S. follows through. The federal Liberals proposed a similar three per cent digital tax on big tech companies during their successful election campaign last fall. Even if France decides to walk back its tax scheme—it has not indicated it will—the U.S. will inevitably have to abide by a similar digital tax that the OECD plans to introduce. The proposed law would let countries levy their own tax rate, agreed to by OECD members, on foreign companies without a physical presence in their jurisdiction. Once passed, France has said it will replace its own digital tax with OECD’s.