News World Trump takes aim at French wine in tax dispute

Trump takes aim at French wine in tax dispute

Donald Trump has taken aim at French President Emmanuel Macron with a threat of tariffs. Photo: Getty
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Donald Trump has turned his aim to France, declaring “American wine is better” as he hinted at taxing the ally nation’s wines.

Mr Trump as vowed to hit back at France’s decision to impose a “digital tax” on multinational tech companies like Google.

He accused French president Emmanuel Macron of “foolishness” and warned America would take “substantial reciprocal action”.

“If anybody taxes them, it should be their home Country, the USA. We will announce a substantial reciprocal action on Macron’s foolishness shortly,” Mr Trump tweeted on Friday.

“I’ve always said American wine is better than French wine!”

France claims large multinational firms pay little or no corporate tax in countries where they are not based however the Trump administration says the new tax unfairly targets American companies.

Last week, Mr Trump spoke with Mr Macron and expressed concerns about the country’s proposed digital services tax, the White House said.

White House spokesman Judd Deere said the US “is extremely disappointed by France’s decision to adopt a digital services tax at the expense of US companies and workers.

“France’s unilateral measure appears to target innovative US technology firms that provide services in distinct sectors of the economy.”

He added “the administration is looking closely at all other policy tools”.

The tax is due to apply retroactively from the start of 2019.

The US Trade Representative’s Office said the measures “amount to de facto discrimination against US companies … while exempting smaller companies, particularly those that operate only in France”.

A USTR probe of the impacts of the tax could lead to the US imposing new tariffs or other trade restrictions on France.

USTR said the levy was an “unreasonable tax policy”.

The plan departs from tax norms because of “extraterritoriality; taxing revenue not income; and a purpose of penalising particular technology companies for their commercial success”, it said.

Two weeks ago, the French Senate approved the 3 per cent levy that will apply to revenue from digital services earned in France by firms with more than 25 million euros ($A40 million) in French revenue and 750 million euros worldwide.

Other EU countries including Austria, Britain, Spain and Italy have also announced plans for their own digital taxes.

They say a levy is needed because big, multinational internet companies such as Facebook and Amazon are currently able to book profits in low-tax countries like Ireland, no matter where the revenue originates.

Political pressure to respond has been growing as local retailers on main streets and online have been disadvantaged.