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Macron, Trump to hold off on digital tax

January 21, 2020

Paris and Washington have agreed to extend negotiations on disputes over a French digital tax to the end of 2020, postponing Trump's threat of sanctions. The two presidents have agreed to avoid a trade war.

The logos of Google, Facebook and Amazon
Image: picture-alliance/dpa/Kyodo

French President Emmanuel Macron has said he and US President Donald Trump would collaborate over France's planned digital tax and avoid an increase in tariffs.

After talks over the weekend, Macron and Trump agreed to put a hold on their tariff spat until 2021, a French diplomatic source said Monday, according to Reuters news agency.

"They agreed to give a chance to negotiations until the end of the year," the source said. "During that time period, there won't be successive tariffs."

Read moreEU finance ministers shelve plan to tax tech giants

According to French news agency AFP, the source said the two presidents agreed to give talks a chance to "find a solution in an international framework" and avoid "a trade war that will benefit no one." 

Macron tweeted earlier Monday that he had had a "great discussion" with Trump on the issue. "We will work together on a good agreement to avoid tariff escalation," he said.

US threatens French imports

France announced in July that it would impose a 3% levy on revenue from digital services earned in France by firms with revenues of more than €25 million ($28 million) in France and €750 million worldwide. 

France has been searching for a new model for tax revenues earned through advertising and online sales. Washington has accused Paris of singling out US companies such as Amazon, Apple, Facebook, Google and Netflix. 

In response, the US threatened to apply taxes up to 100% of the value of imported French products such as Camembert cheese, wine and Champagne

Negotiations underway

French Finance Minister Bruno Le Maire is set to meet US Treasury Secretary Steven Mnuchin at the World Economic Forum in Davos on Wednesday.

Paris and Washington are expected to continue negotiations over the digital tax at the Organization for Economic Cooperation and Development (OECD) until the end of the year.

"France is pursuing its objective of fair taxation on digital companies and finding a compromise within the framework of the OECD," the French presidency said Monday.

France has said it would abandon the digital tax if an international agreement is reached. The White House has not yet commented on the matter. 

mvb/cmk (AFP, Reuters)

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