U.S. objections to French tech tax overshadow G-7 finance meet

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The Associated Press CHANTILLY, France (AP) — The Trump administration is objecting to France’s plan to tax Facebook, Google and other U.S. tech giants, a rift that’s overshadowing talks between seven longtime allies this week on issues ranging from digital currencies to trade.

As finance ministers from the Group of Seven rich democracies gathered Wednesday for a two-day meeting at a chateau in Chantilly, near Paris, U.S. Treasury Secretary Steven Mnuchin planned to take a tough line against host France.

He was going to object to France’s proposed 3% tax on revenues of large tech companies with French Finance Minister Bruno Le Maire, according to a senior U.S. Treasury official.

The controversial tax, which the French parliament passed days ago and could be signed into law within weeks, has already provoked a strong rebuke from the White House, which said it could lead to U.S. tariffs on French imports.

The rift risks feeding into broader disagreements, including on trade, after the U.S. imposed tariffs on some EU goods last year, drawing retaliation from Europe.

“We are very disappointed that France has passed a unilateral service tax,” said the Treasury official, who said Mnuchin was to raise the issue during a bilateral meeting with Le Maire. The official spoke on condition of anonymity as the meeting had not yet taken place at the time.

French officials have indicated their national digital tax — the first of its kind and created without any EU-wide agreement on the issue — is intended to spur an international agreement during the G-7 meeting. They said it will be withdrawn if a global deal is forged, a gamble that could provide negotiating leverage with the U.S.

“We (are)… accepting to negotiate a new global taxation on digital activities,” Le Maire told reporters outside the royal stables at Chantilly, a town famed today for horse racing.

Discord is no stranger to G-7 meetings. Last June, Trump roiled the G-7 summit in Canada by first agreeing to a group statement on trade only to withdraw from it while complaining that he had been blindsided by Canadian Prime Minister Justin Trudeau’s criticism of Trump’s tariff threats. In an extraordinary set of tweets, Trump threw the G-7 talks into disarray.

Officials seem to be prepared for the potential for ugly divergences at this week’s G-7, with Mnuchin saying it could end with just a report of the discussion — rather than the traditional final statement signed by all.

The regulation of technology companies is emerging as a major issue around the world. The U.S. is following the European Union’s lead in taking a closer look at whether some of them are too big for the good of the wider economy. The topic was underscored Wednesday, when EU regulators opened a formal antitrust investigation into Amazon , echoing similar ones against the likes of Google and Microsoft.

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