Trump says U.S. close to reaching a compromise with France on digital tax

U.S. President Donald Trump on Monday said that Washington is close to reaching a compromise over France’s digital tax.

Trump’s remarks came as he spoke to reporters at the G-7 summit in Biarritz, France, alongside German Chancellor Angela Merkel.

Merkel, meanwhile, said Organisation for Economic Co-operation and Development (OECD) nations wanted a solution to digital taxation by 2020.

France passed a 3 percent tax in July that targets around 30 big tech companies, including Facebook, Amazon, and Google. It applies to organisations with annual revenues exceeding €750 million ($830 million) arising from “digital activities,” including €25 million ($27 million) made in France.

Tensions over the tax have been growing between the two nations, with U.S. President Donald Trump claiming the levy targets “great American companies” and threatening to impose tariffs on French goods in retaliation.

“If they do that … we’ll be taxing their wine like they’ve never seen before,” he told reporters before leaving for Biarritz, according to Reuters.

Although France pushed forward with its own domestic tax on digital companies, an EU-wide effort failed last year. However, EU chief Donald Tusk said at the G-7 summit on Saturday that the block would “respond in kind” if France was targeted by the U.S. in response to its digital tax.

On Friday, reports in the Financial Times and Politico, citing internal documents, claimed EU officials were planning to launch a sovereign wealth fund worth $110 billion to invest in European companies.

According to the reports, the proposal would be designed to help European companies catch up with competitors from the U.S. and China, with the draft explicitly naming a slew of tech giants including Apple, Amazon, Alibaba, and Tencent as threats.

Source: CNBC