US objects to French tax on tech firms at G-7 meeting

CHANTILLY, France (AP) — The Trump administration is objecting to France’s plan to tax Facebook, Google and other United States (US) tech giants, a rift that’s overshadowing talks between seven longtime allies near Paris this week on issues ranging from digital currencies to trade.

As finance officials from the Group of Seven rich democracies’ gathered yesterday at a chateau in Chantilly, near Paris, US Treasury Secretary Steven Mnuchin planned to take a tough line against host France.

He was going to object against France’s proposed three per cent tax on revenues of large tech companies with the G-7 host, French Finance Minister Bruno Le Maire, according to a senior Treasury official.

The controversial tax, which the French Parliament passed days ago and could be signed into law within weeks, has already provoked a strong rebuke from the White House, which said it could lead to US tariffs on French imports.

The rift risks feeding into broader disagreements, including on trade, after the US imposed tariffs on some European Union (EU) goods last year, drawing retaliation from Europe.

French Finance Minister Bruno Le Maire (L) welcomes US Treasury Secretary Steve Mnuchin at the G-7 Finance in Chantilly, north of Paris yesterday. – AP

“We are very disappointed that France has passed a unilateral service tax,” said the Treasury official, who said Mnuchin was set to raise the issue during the bilateral meeting with Le Maire. The official spoke on condition of anonymity as the meeting had not yet taken place.

French officials have indicated the digital tax is intended to spur an international agreement during the G-7 meeting and pledged it will be withdrawn if a deal is forged. This strategy is expected to give the hosts some negotiating leverage with the US.

“We (are)… accepting to negotiate a new global taxation on digital activities,” Le Maire told reporters outside the royal stables at Chantilly, a town famed today for horse racing.

Discord is no stranger to G-7 meetings.

Last June, Trump roiled the G-7 summit in Canada by first agreeing to a group statement on trade only to withdraw from it while complaining that he had been blindsided by Canadian Prime Minister Justin Trudeau’s criticism of Trump’s tariff threats. In an extraordinary set of tweets, Trump threw the G-7 talks into disarray.

The regulation of technology companies is emerging as a major issue for countries.

The US is following the EU’s lead in taking a closer look at whether some of them are too big for the good of the wider economy.