French Finance Minister Bruno Le Maire said earlier this week that France will retaliate with the European Union if the US decides to implement its trade sanctions in January over recent French tax on digital services.
For those unaware, the Trump administration announced back in July that it would levy additional duties of 25 percent on French cosmetics, handbags, and other imports. These are valued around 1.3 billion US Dollars. The changes in customs arrived after France announced its digital services tax, with its implementation being on hold till January 2021. According to Le Maire, “If there are American sanctions against the French decision, which … is the application of French law, we will immediately seek a riposte at the European level.”
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The French Finance Minister said this in a meeting with the European Union regarding the digital services taxation. Notably, France had suspended collection of its digital services tax till January, as international negotiations were under way to rewrite the rules of cross border digital taxation, as per a Reuters report. At the moment, about 140 countries are involved in these talks, with negotiations to last till mid 2021. The discussions were stalled as the US was reluctant to sign on a multilateral deal ahead of its presidential elections.
Furthermore, France has already sent out notices to companies that are liable to pay the December installment of the tax. It is expected that the taxes will raise over 400 million euros (roughly 482 US Dollars) in 2020 alone. The French Finance Minister also pledged that the country will revoke the French tax as soon as international agreement was reached. Meanwhile, trade partners of the US are also waiting to see what stance the next6 president Joe Biden will take on the matter.
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