Trade War Over Digital Tax Unlikely: French Lawmaker (Corrected)

April 8, 2019, 5:51 PM; Updated: April 8, 2019, 7:47 PM

A French lawmaker involved in drafting the country’s digital tax bill dismissed concerns that the proposal could lead to a trade war with the U.S.

“Our response is two-fold. First, France is a sovereign country that conducts its own tax policy. Second, I don’t see how a trade war could be started by a tax that raises 400 million euros,” assembly member Joel Giraud said April 8 as the country’s National Assembly began debate on the measure.

  • Secretary of State Mike Pompeo has urged France not to move forward with the proposal, which is aimed at U.S. tech giants like Alphabet Inc.'s Google, Facebook Inc., and Apple Inc.
  • Giraud compared the proposal to recent European Commission fines on companies like Google that totaled billions of euros. “That didn’t trigger the apocalypse,” he said.
  • The measure is necessary because France doesn’t collect tax on the value U.S. tech multinationals create from French consumer data, said French Finance Minister Bruno Le Maire, also speaking at the National Assembly. “It is unacceptable that this tax situation leads to the emergence of digital giants that buy, one by one, all our startups and kill innovation in our country,” Le Maire said.
  • The bill would impose a 3 percent tax on the revenue large companies earn from certain digital activities, like targeted online advertising and “intermediary” platforms that connect buyers and sellers online.
  • France’s planned tax has elicited recent responses from other U.S. officials. A group of House Republicans wrote a letter to President Donald Trump urging him to take action in response, and the U.S. Trade Representative’s office included digital tax measures like France’s on a list of “key barriers to digital trade” in 2019.
(Corrects Pompeo's comments in 3rd paragraph. )

To contact the reporters on this story: Rick Mitchell in Paris at correspondents@bloomberglaw.com, Isabel Gottlieb in Washington at igottlieb@bloombergtax.com

To contact the editors responsible for this story: Meg Shreve at mshreve@bloombergtax.com; Karen Saunders at ksaunders@bloombergtax.com

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