Macron claims deal to end digital service tax fight with the US


Burying the hatchet? —

Trump shows no sign of ending feud over 3% tax on digital services.


France's President Emmanuel Macron (R) and US President Donald Trump shake hands during a joint-press conference in Biarritz, France, on August 26, 2019.

Enlarge/France’s President Emmanuel Macron (R) and US President Donald Trump shake hands during a joint-press conference in Biarritz, France, on August 26, 2019.

LUDOVIC MARIN/AFP/Getty Images

The United States and France havereached a dealover the taxation of digital services, French President Emmanuel Macron said at aMonday news conferencealongside US President Donald Trump. But later in the same conference, Trump pointedly declined to confirm that a deal had been reached—leaving the state of the negotiations unclear.

“We have reached a very good agreement,” Macron said, speaking through a translator.

The two leaders have been feuding since last month, whenTrump threatenedto slap retaliatory tariffs on French products. “I’ve always said American wine is better than French wine,”Trump tweeted.

Later in Monday’s press conference, a French reporter observed that First Lady Melania Trump had been seen drinking French wine. She asked Trump to confirm that the US and France had a deal on digital service taxes.

“I can confirm that the first lady loved your French wine,” Trump said, pointedly ducking the question about the digital services tax.

On paper, France’s 3% tax on digital services revenue isn’t focused on any specific country. But the tax targets large companies—those that have at least €750 million ($830 million) in global revenue—and big global tech companies are disproportionately based in the United States. So, the USarguedlast month, the tax “will amount tode factodiscrimination against US companies.”

This weekend’s G7 summit provided an opportunity for the two countries to patch up their relationship.According to Reuters, French foreign minister Bruno Le Maire spent the weekend huddling with US officials to try to work out a deal to defuse tensions.

Now Macron says that a deal has been reached.

“Some digital players pay very little tax,”Macron tweetedon Monday. “This is an injustice that destroys jobs.” He added that he and President Trump “have just agreed to work together on an agreement at the OECD level to modernize international tax rules.”

Macron is hoping that the Organization for Economic Cooperation and Development will establish an international framework for taxing digital services by next year. If that happens, Macron says, France will refund tax money it has collected under its current 3% tax.

But while Macron is clearly enthusiastic about this plan, Trump doesn’t seem to match his enthusiasm. The US president gave no indication during Monday’s press conference that he shares France’s goal to develop a global system for taxing digital services.

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