European Countries Slam US Withdrawal From Tech Tax Talks

PARIS (AP) -- European countries are slamming the Trump administration's withdrawal from negotiations on a major digital services tax.

French Finance Minister Bruno Le Maire, speaking on France Inter, called it a “provocation” and said France will still implement the tax regardless of the U.S. change of heart.

Le Maire was referring to a letter, first reported by the Financial Times, in which U.S. Treasury Secretary Steven Mnuchin told the finance ministers of France, Spain, Italy and the United Kingdom that he was suspending talks on the tax.

“This letter is a provocation. It is a provocation against all the partners at the OECD (the Organization for Economic Co-operation and Development) when we were centimeters away from a deal on the taxation of digital giants,” Le Maire said.

The countries have been discussing an international agreement on the way global taxes work. The tech tax is meant to prevent tax avoidance measures by multinationals, but the U.S. has said it unfairly singles out companies like Amazon and Google.

In Europe, big tech firms such as Google and Facebook pay most of their taxes in the European Union country where their registered headquarters are based and often pay very little in countries where they run large and profitable operations.

“The digital tax is a necessity of the 21st century. It’s not a whim or an eccentricity,” Spanish Finance Minister María Jesús Montero told Spain’s Cadena SER radio. “This is because we have an analogue taxation system while we have a digital society and a digital economy”.

Le Maire said there was a joint response to the letter from the four countries on Thursday.

The French parliament approved the initial stages of a digital tax law last year but agreed to postpone implementation until December of this year in exchange for the U.S. holding off on retaliatory tariffs.

A so-called “Google tax” is also making its way through the Spanish parliament, with eye toward levying it later this year. The Spanish Cabinet agreed in February to go ahead with its adoption despite threats of retaliatory tariffs by the Trump administration.

Spain wants to place a 3% tax on online ads, on deals brokered on digital platforms and on sales of user data by tech companies that have a turnover of more than 750 million euros a year internationally and more than 3 million in Spain. It hopes to raise close to 1 billion euros a year in extra tax revenue.