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France will delay controversial tech tax

The country reached a truce with the United States

Macron Addresses Business Leaders At Elysee Palace Photo by Antoine Gyori/Corbis via Getty Images

France and the United States have reached a truce on a debate over a controversial French “digital tax” that was set to hit some of America’s biggest tech companies.

This year, France passed a law requiring large digital service companies to pay a 3 percent tax on total annual revenue generated by providing services to French users. The US immediately pushed back on the plan, saying the tax was aimed squarely at major American tech companies like Google, Facebook, and Amazon. In response, the US threatened to implement massive tariffs on French goods.

But French president Emmanuel Macron said on Twitter this week that he’d had a “great discussion” with President Donald Trump about the tax. “We will work together on a good agreement to avoid tariff escalation,” Macron wrote. The Wall Street Journal reported that France had agreed to postpone the tax until the end of 2020 while the US postpones the tariffs.

Today, at the World Economic Forum in Davos, Switzerland, US Treasury Secretary Steven Mnuchin and French finance minister Bruno Le Maire formally announced the ceasefire, according to the Financial Times. But the negotiations will continue, as the two countries talk over a broader international agreement on taxes in 2020.