France Still Going Forward With Digital Services Tax Even As Deal Announced
France's President Emmanuel Macron, speaking at a press conference at the G-7 meeting Aug. 26, said that the U.S. and France have agreed they will work together to reach an agreement in 2020 on modernizing the international tax rules. Macron, who was speaking in French, said that the 3 percent digital services tax is not designed to punish any large companies. Rather, he said, "it's to fix the problem. And there are also plenty of French companies that will be touched by this tax."
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The U.S. is treating the tax as thinly disguised protectionism, and has opened a Section 301 investigation on it. Whether tariffs on French goods could follow is unclear, and President Donald Trump did not answer a question at the G-7 meeting on whether taxing French wine is now off the table with this agreement. But Macron said that the French tax will be in place until the day the international agreement is reached. He said that if the collections under the tax are higher than are eventually agreed to, the excess will be refunded.
The top Democrat on the Senate Finance Committee panned the deal. “The Trump administration should reject any deal that allows France and other countries to move ahead with discriminatory taxes on U.S. technology companies, in exchange for vague promises down the line,” Sen. Ron Wyden, D-Ore., said in a statement. “If Donald Trump gives France a pass now, then it will be open season for foreign governments to go after major American employers.”