Trump Could Dust Off Tax Rule for French Retaliation

Countries around the world are talking about taxing the revenue of giant digital-business companies. In July, France became the first European country to enact a digital services tax—immediately drawing the ire of U.S. officials.

The U.S., home of digital giants like Amazon.com Inc., wants France and other countries to wait for a global agreement on digital taxation, which could rewrite the rules that determine where and how multinationals in many industries are taxed. In the meantime, Washington has opened a trade investigation.

President Donald Trump tweeted that taxing French wine might be a way to retaliate. But he has another option, buried in the tax code. The provision—Section 891, which has never been used—stems from another tax dispute between the U.S. and France, more than 80 years ago.

Bloomberg Tax’s Isabel Gottlieb spoke with Itai Grinberg, professor of international tax at Georgetown University. Previously an attorney in the Treasury Department’s Office of International Tax Counsel and in private practice, Grinberg also consults with multilateral institutions on international tax issues.

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