Trump vows to retaliate against French digital tax

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US President Donald Trump is threatening to retaliate after French President Emmanuel Macron signed legislation imposing a 3% tax on digital transactions.

France has said it would withdraw the tax if an worldwide agreement was reached, and Paris hopes to include all of the OECD countries by the end of 2020. For tech companies like Apple, Google, Facebook, and Microsoft, this is the United States.

The tax affects companies with at least 750 million euros (US$845 million) in global revenue and digital sales of 25 million euros in France.

The move is aimed at stopping multinational companies from avoiding taxes by setting up headquarters in low-tax European Union countries.

Trump blasted Macron's "foolishness" for pressing ahead with the French levy and warned his administration would announce "substantial reciprocal action".

"I've always liked American wines better than French wines, even though I don't drink wine", the president said Friday.

French Finance Minister Bruno Le Maire stated on Saturday, 27 July, that it was necessary to avoid mixing together the issues of digital tax that Paris seeks to introduce against the United States tech companies and the levies on wine threatened by Trump.

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She added: "It's not too long ago that a British citizen had their sentence toughened because of Boris Johnson's loose tongue". Chatham House's Sanam Vakil told Newsweek: "I think that Johnson can leverage those differences if he wants to".

Amid growing risks of a trade spat between Washington and Paris that may put to test the relation between the two erstwhile allies, Le Maire told Trump that "there is no desire to specifically target American companies".

"The Trump administration has consistently stated that it will not sit idly by and tolerate discrimination against US-based firms", said White House spokesman Judd Deere. I told them don't do it because I'll tax your wine.

Trump's tweet was followed by a White House statement saying the U.S.is "extremely disappointed" by the tax. "They're used to taking advantage of the United States, but not with me as president".

France isn't alone among European nations in arguing that internet companies aren't paying their fair share into public coffers. In 2018, the USA made up almost a quarter of all French wine exports, amounting to €3.2 billion ($3.6 billion).

The digital tax has also riled Republican and Democratic members of Congress. Leaders of the Senate Finance Committee have urged Treasury Secretary Steven Mnuchin to explore increasing taxes on French subsidiaries in the U.S.

Earlier this month, the United States threatened tariffs on another $4 billion worth of additional European Union goods, including wine, cheese and whiskey - that could be hit with tariffs as part of a almost 15-year dispute at the World Trade Organization over aircraft subsidies given to us planemaker Boeing Co and its European rival, Airbus SE. The plan departs from tax norms because of "extraterritoriality; taxing revenue not income; and a goal of penalizing particular technology companies for their commercial success", it said. According to 2018 figures from the European Commission, global tech companies pay a 9.5% average tax rate compared with 23.2% for traditional firms.

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