French-US clash over tech tax casts shadow over G-7

Bloomberg

A French-US clash over digital taxation overshadowed the start of a Group of Seven (G-7) finance chiefs meeting as France refused to flinch on its levy that would hit tech giants from Facebook to Alphabet’s Google.
Just before an encounter with US Treasury Secretary Steven Mnuchin at the G-7 near Paris, French Finance Minister Bruno Le Maire pledged to forge ahead with a 3 percent tax on digital revenues of large companies.
France hopes its drive will pressure the US to be more constructive in talks at the Organization for Economic Cooperation and Development (OECD) to agree on a similar levy on profits in 129 countries.
“We will make every effort to get an agreement on digital tax here at the G-7 and open the path to a solution in 2020 at the OECD,” Le Maire told reporters. “It will be difficult, I know the US position has toughened recently.”
Le Maire’s defiance is likely to meet with a chilly response from US President Donald Trump’s administration.
According to a report in Spanish newspaper El Mundo, the US State Department has sent letters to embassies in several countries, including Spain, ordering them to alert governments that retaliation will follow if they go down the same path as France.
“A great number of countries are now taking this line — the UK has moved forward, Austria wants to do it,” Spanish Economy Minister Nadia Calvino said about the potential of digital
taxation, speaking to Cadena Ser radio.
“At the European level, practically all of us are in agreement.”
If France and the US fail to resolve their differences in Chantilly, it could derail any effort to tax tech giants such as Amazon.com Inc.
“An agreement at the G-7 is decisive,” Le Maire said. “If we don’t get an agreement on the broad principles of digital taxation today and tomorrow, quite frankly it will be difficult
to make an agreement between the 129 countries.”

Retaliation Threat
US Trade Representative Robert Lighthizer already reacted to the French parliament’s approval of the tax by launching an investigation to determine whether the measure is “discriminatory or unreasonable and burdens or restricts United States commerce.”
The US could ultimately impose retaliatory tariffs or other trade limits, or even use provisions in the tax code to punish French citizens and companies.
In the discussions for a global digital tax at the OECD, France has agreed to consider a US approach that would target all businesses with a significant digital activity. But Le Maire
said France still wants a global solution to take into account the advantages purely digital companies get from their giant networks.

Amazon settles antitrust probe ahead of EU battle
Bloomberg

Amazon.com Inc struck a deal with Germany and Austria to shut down antitrust probes into how it handles other merchants on its site, just as it faces a bigger European Union investigation into its use of sellers’ data.
The US retail giant will change its business services agreement worldwide in mid-August to address a number of complaints from sellers, the German Federal Cartel Office said.
“We have obtained far-reaching improvements for sellers active on Amazon marketplaces worldwide,” Andreas Mundt, president of the German regulator, said in the statement. “The proceedings are now terminated.”
Amazon’s troubles in Europe are only just beginning even as those two probes end. The company faces a full-blown EU antitrust investigation that could be announced soon.