April 4, 2019 / 10:16 PM / 2 months ago

UPDATE 1 -Pompeo urges France not to approve digital services tax

(Adds details and background)

WASHINGTON, April 4 (Reuters) - U.S. Secretary of State Mike Pompeo urged France in a meeting with his French counterpart Jean-Yves Le Drian on Thursday not to approve a digital services tax, saying it would hurt U.S. technology firms, the U.S. State Department said.

France and Britain as well as Italy and Spain are pushing ahead with plans for such taxes after EU countries failed to reach an agreement for the bloc as a whole.

“Secretary Pompeo urged France not to approve a digital services tax, which would negatively impact large U.S. technology firms and the French citizens who use them,” the State Department said after Pompeo met Le Drian on the sidelines of a NATO ministerial meeting in Washington.

The French foreign ministry said in a later statement that Le Drian had assured Pompeo that France’s position on taxing tech firms had not changed, urging his counterpart to instead join in efforts to bring in rules at an international level.

France has spearheaded efforts at the EU and on the international level to change rules that currently enable companies such as Facebook and Google to reduce their tax bills by booking revenue in low-tax countries like Ireland.

The Organisation for Economic Cooperation and Development (OECD) is working on a draft deal, which it officially aims to have ready in 2020.

French Finance Minister Bruno Le Maire said in February he hoped headway on this accord could even be made in 2019, amid positive noises at that point from Washington.

Le Drian told Pompeo he wanted the United States to join Le Maire’s push, “with a view to accelerating the negotiations underway for an international digital tax at OECD level, which would substitute national taxes,” the foreign ministry said. (Reporting by Lesley Wroughton and David Brunnstrom in Washington and Sarah White in Paris; Editing by Chizu Nomiyama and Sandra Maler)

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