The United States announced an additional 25% retaliatory tariff on $1.3 billion worth of French luxury goods (including cosmetics, handbags, etc.) in response to the French government's digital services tax policy.
It is reported that this additional tax measure of the US government will be postponed to January 6, 2021. At the same time, discussions about the differences between the United States and France continue.
Robert Lighthizer, a staff member of the office of US trade representative, believes that digital taxation in France is discriminatory and unfair to us digital technology companies. Although it is true that some multinational companies in the United States transfer their profits overseas for tax avoidance, the United States will not tolerate unfair treatment.
In July last year, France announced a 3% digital services tax on US technology giants such as Google, apple, Facebook and Amazon, because they were accused of diverting profits overseas for tax avoidance.
A survey by the U.S. trade representative's office in January ruled that France's digital taxes were "unreasonable" and threatened to impose 100% tariffs on $2.4 billion worth of French imports. It is understood that the tax action may pose a threat to French luxury goods companies such as LVMH group, herm è s international and kering group (Kaiyun).
However, in January this year, the United States and France reached an agreement, the French side agreed to suspend the collection of digital services tax, and the United States also agreed to suspend the implementation of retaliatory measures.
It is reported that the United States and France have been trying to reach an agreement through the organization for economic cooperation and development (OECD) negotiations to solve the current tax difficulties faced by the two countries. However, the talks did not make much progress and were suspended due to the new outbreak.
Bruno le Maire, French finance minister, said: "if there is no international solution by the end of 2020, we will implement a digital tax policy as we have been saying."
"Retaliatory tariffs are not ideal, but if the French government refuses to withdraw the unfair and punitive tariffs unilaterally imposed on US enterprises, the US government has no choice," Chuck Grassley, chairman of the Finance Committee of the US Senate, said in a joint statement.
Vitor Gaspar, head of the International Monetary Fund's Department of financial affairs, called for an international agreement, saying "there is a perception that companies that are highly profitable around the world have not paid their taxes."
"It's important to avoid a trade war and a tax war, and cooperation is in the best interests of all," Gaspar said. If an agreement can be reached on the taxation of international enterprises, it shows that the international community can benefit together. "
Matt schroers, chairman of the computer and communications industry association, welcomed the US move, saying in a statement that it showed that discriminatory taxation of US companies was not a way to modernize the global tax system. The change of international tax rules must be based on the consensus reached by both sides, so as to cope with the change of global economic digitization.
