France and US reach agreement on internet tax after tariffs threat from Trump

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France and US reach agreement on internet tax after tariffs threat from Trump
The 'GAFA' tax is named after Google, Amazon, Facebook and Apple. Photo: AFP

French President Emmanuel Macron said on Monday that G7 members had reached an agreement on the taxation of tech giants, a long-running subject of friction between France and the US.


"On the digital tax we have reached a deal to get beyond the difficulties we had between us," Macron told a press conference with US President Donald Trump at the G7 summit in Biarritz, adding France would scrap its own digital tax once the new international levy is in place.

Trump had reacted furiously to French plans to tax multi-national giants like Google, Amazon, Facebook and Apple, threatening to retaliate with tariffs on French wine.

READ ALSO French winemakers face anxious wait over US tariff threat

The French law nicknamed the GAFA tax would require companies to pay a three percent tax on digital gross sales in France from January 1st, 2019.

Many tech giants such pay virtually no tax in countries where they make vast profits, due to how they declare they global income.

The French tax was introduced after Macron failed to persuade other European leaders to implement an EU wide tax on tech firms, but Macron had always been hopeful that an international agreement could be reached.

He has said that France's tax would be scrapped once a new international levy is in place.



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