France, US, 140 countries agree to push cross-border tax reform

French Finance Minister Bruno Le Maire and his new US counterpart Janet Yellen agreed to seek an international agreement on new rules for taxing multinational businesses, the US Treasury and French finance ministry said after the two spoke on Thursday.

Nearly 140 countries have agreed to rewrite, by mid 2021, the rules about how companies are taxed outside their home countries to take into account the rise of big digital companies like Google, Amazon, and Facebook.

Countries will have to agree to specific profitability thresholds, giving governments rights to tax multinationals and how to take into account the size of a country’s economy.

Paris and Washington clashed during the Trump administration over France’s tax on digital service companies and over reluctance from Yellen’s predecessor Steven Mnuchin to move forward on talks to overhaul the rules for taxing cross-border commerce.

“The Secretary committed to re-engage actively in the ongoing OECD discussions on international taxation to forge a timely international accord,” the US Treasury said in a statement issued after the first call between Yellen and Le Maire since she took office on Tuesday.

France’s Finance Ministry said the two “agreed on the need to find multilateral solutions to many of the issues facing the global economy, including addressing the tax challenges of efficiently and equitably taxing the income of multinational firms.”

The same language has appeared in Treasury statements issued after Yellen’s calls with British Finance Minister Rishi Sunak and German Finance Minister Olaf Scholz. In all three calls, Yellen emphasized cooperation in “ending the pandemic, supporting a strong global economic recovery, fighting income inequality and forcefully addressing the threat of climate change,” the Treasury said.

Le Maire and Yellen also spoke about the need to reduce trade tensions between Europe and the United States, which flared during the Trump administration.

The French minister in particular raised the topic of U.S. trade sanctions on French wine growers that the Trump administration had put in place over a long-running aircraft subsidies dispute.