French Foreign Minister Bruno Le Maire has slammed the US over its move to suspend talks on a global digital services tax, proposed by the Organisation of Economic Co-operation and Development (OECD).
Referring to US Treasury Secretary Steven Mnuchin’s recent letter on the matter, Le Maire described the document as “a provocation”.
“It’s a provocation towards all the partners at the OECD when we were centimetres away from a deal on the taxation of digital giants", Le Maire said on France Inter radio on Wednesday, in an apparent nod to Google, Apple, Facebook, and Amazon.
This echoed Le Maire’s earlier remarks that “the last state that is blocking an agreement on digital taxation at the OECD is the United States”.
This followed Mnuchin admitting in the letter to finance ministers from the UK, Spain, Italy, and France seen by the Financial Times that the global digital tax-related discussions had reached an “impasse”.
“Attempting to rush such difficult negotiations is a distraction from far more important matters. This is a time when governments around the world should focus their attention on dealing with the economic issues resulting from COVID-19”, Mnuchin underlined.
He also warned that if “countries choose to collect or adopt such taxes, the United States will respond with appropriate commensurate measures”.
US Treasury Department spokeswoman Monica Crowley, for her part, said in a statement that Washington is suggesting “a pause in the talks” so that national governments can focus on responding to the coronavirus pandemic.
US Trade Representative Robert Lighthizer, in turn, struck a sterner tone, saying that “we were making no headway” and “the secretary [Mnuchin] made the decision that rather than have them go off on their own he would just say we’re no longer involved in the negotiations”.
Lighthizer made the statement after he initiated a probe earlier in June about whether digital services taxes considered by Austria, Brazil, the Czech Republic, the EU, India, Indonesia, Italy, Spain, Turkey, and the UK were in sync with trade regulations.
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Last year, US President Donald Trump threatened to impose tariffs on French goods in response to Paris’ pushing to introduce a digital service tax on the annual revenues of mostly American companies.
The three-percent tax, called "GAFA" by the French media (an acronym that means Google, Apple, Facebook, and Amazon) targets digital companies with global annual sales of more than €750 million ($849 million) and sales in France of at least €25 million ($27.7 million).
As for the OECD-proposed digital tax, it includes two key pillars, with the first portion due to provide the countries with the right to tax profits based on sales within their borders. The second pillar stipulates implementing a global minimum tax to keep countries from lowering corporate tax rates in what the Financial Times described as “an attempt to shift company headquarters to their jurisdictions”.
