BIARRITZ: France and the US reached a deal to end a standoff over a French tax on big internet companies, though US President Donald Trump declined to say whether his threat of a retaliatory wine tax was off the table as a result.

The compromise struck between French Finance Minister Bruno Le Maire, US Treasury Secretary Steven Mnuchin and Donald Trump’s White House Economic Adviser Larry Kudlow foresees France repaying companies the difference between the French tax and a planned mechanism being drawn up by the Organisation for Economic Cooperation and Development. France’s 3 per cent levy applies to revenue from digital services earned by firms with more than €25 million ($27.86m) in French revenue and €750m ($830m) worldwide.

US officials complain it unfairly targets US companies such as Facebook, Google and Amazon. They are currently able to book profit in low-tax countries such as Ireland and Luxembourg, no matter where the revenue originates.

The row had threatened to open up a new front in the trade spat between Washington and the European Union as economic relations between the two appear to sour. Defusing the row was a positive for Macron at a summit with few concrete outcomes.

“We’ve done a lot a work ... we have a deal to overcome the difficulties between us,” Macron told a news conference alongside Trump at the end of a G7 summit in France.

Le Maire and his US counterparts worked on finding a deal all weekend, first at the French finance minister’s family house in the Basque countryside and later at a Sunday dinner in a Biarritz restaurant, the source said.

Published in Dawn, August 27th, 2019