France tells the US: backs a global digital tax or risks others being left alone

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PARIS (Reuters) – The United States risks a proliferation of national taxes on tech giants if President Donald Trump rejects new international rules to tax digital companies at next week's World Economic Forum, the French government said on Friday.

ARCHIVE PHOTO: Bottles of champagne displayed in Paris, a product that the U.S. has threatened to impose tariffs in retaliation for a French tax on digital companies. REUTERS / Benoit Tessier / Photo archive

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Finance Minister Bruno Le Maire wants a US commitment in Davos to international tax reform and is also pushing Washington to lift the threat of tariffs on French champagne, cheese and luxury exchanges made in retaliation for France's own digital tax .

The deal was close to a universal tax proposal drafted by the Organization for Economic Cooperation and Development, said Le Maire, but Washington needed to take the "last step" to reach a compromise.

“The proposal on the table is the right solution. We are not far from an agreement, ”Le Maire told reporters after talks with OECD chief Angel Gurria. "We are asking our American friends to take the last step in the next few days."

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Washington threatened to impose fees of up to 100% on French products worth $ 2.4 billion after an investigation by the U.S. government found that the French tax would hurt American technology companies.

Last year, France applied a 3% tax on digital services revenue earned in France by companies with revenues exceeding 25 million euros ($ 27.78 million) in France and 750 million euros worldwide .

Trump says he unfairly targets American companies, a charge that Paris rejects.

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His government said that a decades-long review of international tax rules should have a clause that makes it optional for American companies. Le Maire rejected that possibility, calling it a "non-initiator" and urged Washington to support the OECD proposal as it stands.

Gurria echoed Le Maire and said that alternatives to a complete rewrite of international tax rules were impractical.

"A multiplication of tax regimes, a multiplication of systems, a multiplication of taxes, each with different rates and approaches, would be really uncontrollable," said Gurria.

Reporting by Dominique Vidalon and Leigh Thomas; Written by Richard Lough; edition by Kevin Liffey, Larry King

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