France and the U.S. locked horns on Thursday over taxing digital giants such as Google and Facebook, after Washington said it was breaking off talks aimed at establishing a global framework for making the companies pay larger levies where they operate.
“This letter is a provocation,” French Finance Minister Bruno Le Maire said, confirming receipt of the announcement by U.S. Treasury Secretary Steven Mnuchin.
France, Britain, Italy and Spain have already sent a reply expressing their desire to agree on “a fair digital tax at the level of the OECD as quickly as possible,” Mr.Le Maire said.
“We were a few centimetres away from an agreement on a tax for digital giants, who are perhaps the only people in the world to have benefitted immensely from the coronavirus,” he told France Inter radio.
In January, 137 countries agreed to negotiate a deal on how to tax tech multinationals by 2020-end, under the auspices of the OECD.
European countries in particular say the so-called GAFA — Google, Apple, Facebook and Amazon — are unfairly exploiting tax rules that let them declare profits in low-tax havens, depriving them of a fair share of their fiscal payments.
Meanwhile, France as well as U.K., Spain, Italy and others have imposed taxes on the largest digital firms.
U.S. officials have slammed the moves as discriminating against American firms, and say any new levies should come only as part of a broader overhaul of international tax rules.
Paolo Gentiloni, the EU commissioner for economic affairs, said that he hoped U.S.’s decision to stop the negotiations would not be permanent.