France threatens to seek EU-level response if hit by US sanctions over its digital tax on tech giants

France's finance minister has vowed it won't back down in the face of looming US trade sanctions in response to its digital tax on American tech giants, and said it would instantly seek a reaction from the EU if hit by tariffs.

"I repeat that we will not bow to threats of sanctions or the possibilities of sanctions," Bruno Le Maire told a press conference on Tuesday following an EU meeting on digital tax.

"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."

It comes as French tax collectors last week began asking for millions of dollars from American firms, including Facebook and Amazon, under the digital services tax, which France approved in July 2019.

Washington complained that the tax unfairly penalized US tech companies and in July this year announced retaliatory tariffs of 25 percent on $1.3 billion-worth of French imports, including make-up, soap and handbags.

The Trump administration said it would defer imposing the duties until January 2021.

France also said in January 2020 that it would suspend collecting the digital services tax, which Le Maire estimated could bring in €500 million ($594 million) to French government coffers.

The French government's delay in collecting the tax was to allow the Paris-based Organisation for Economic Co-operation and Development (OECD) more time to develop a taxation framework for tech companies.

But the US then withdrew from talks with the OCED in June, with a solution now not expected until next summer.

"If we don't reach an agreement, these things are just going to run rampant and we're going to have more of the trade war," Cathy Schultz, vice-president for tax policy at the National Foreign Trade Council in Washington, told the FT.

Like this story? Share it with a friend!