DAVOS, Switzerland -- France's finance minister, Bruno Le Maire, said Wednesday that the United States and France had reached a broad framework for using a plan that was being developed by the Organization for Economic Cooperation and Development to set digital taxes, but that further talks were needed and would take place today.
The announcement came a day after the two countries appeared to strike a temporary truce in a trans-Atlantic dispute. President Emmanuel Macron agreed to suspend a French tax on U.S. technology giants in exchange for a postponement of threatened retaliatory tariffs on French goods by the Trump administration.
Any tax framework developed by the Organization for Economic Cooperation and Development must meet certain standards, Le Maire said. "We want the basis to be solid, credible and fair," he said, later adding, "There is still some work to be done."
Further talks also were needed among European nations, he said. If a deal could be reached at the organization, he said, that would be preferable to European countries acting individually or as a group to impose taxes.
"Europe stands united vis-a-vis the U.S." on the preference for a broadly agreed tax framework, Le Maire said.
No comment was immediately available from U.S. officials. Treasury Secretary Steven Mnuchin is expected to hold a briefing in Davos today.
There have been detailed technical talks with Mnuchin and Le Maire's staff for two weeks, as well as a Sunday night phone call between President Donald Trump and Macron, the finance minister said.
Le Maire described the call between Trump and Macron as "decisive," having resulted in an agreement that gave more breathing room to work out further details.
France had drawn scorn from Trump after officials announced plans to impose a 3% tax starting Jan. 1 on the revenue that companies earn from providing digital services to French users.
The fight has not just been limited to France. Silicon Valley's tech giants are a target for much of Europe. Last summer, the European Commission unveiled a proposal to significantly revamp how the companies are taxed in the 28-nation European Union.
The potential proliferation of digital taxes across Europe and other wealthy nations has alarmed many U.S. companies. Mnuchin said Tuesday in an interview with The Wall Street Journal that Britain and Italy also could face tariffs if they imposed digital taxes.
Negotiations over an international tax scheme might also deal with a global minimum tax on corporations' overseas profits, such as the one approved in the United States in 2017. A global minimum corporate tax, which addresses issues like double taxation and tax avoidance, would affect a much broader array of companies than a strictly digital tax.
Le Maire said France wanted the minimum tax rate and digital taxation issues to be handled as a package.
For a minimum tax rate, he said, "I've already given a number around 12.5% as a possibility."
Le Maire made clear that the digital tax issue was far from resolved.
"We need to address fiscal evasion," he said. "We have to address the fact that the biggest companies in the world are making huge profits in Europe and everywhere in the world without paying the due level of taxation because they do not have any physical presence -- we have to address that question."
Business on 01/23/2020