France will delay its digital tax in a move that could avoid a trade war with the US.
Bruno Le Maire, France's finance minister, said that he and his American counterpart had reached an agreement that would allow them to "progress towards a solution".
The tax would have hit US technology giants such as Google, Apple, Facebook and Amazon that make at least €750 million globally and €25 million in France. It would have seen a 3% duty imposed on their French turnover.
When France announced the digital tax, it provoked US threats of a retaliatory tariff on French imports such as cheese and champagne.
But Paris and Washington have now stepped back from a trade war following meetings this week on the sidelines of the World Economic Forum in Davos.
It followed a conversation between US President Donald Trump and French President Emmanuel Macron on Monday work to find an agreement that would avoid "tariff escalation."
The French government will now delay the collection of payments on the tax until December.
But, Le Maire added, there would be no "withdrawal or suspension" of France's digital services tax unless there is an "international solution" to replace it.
Le Maire said last month that France would be willing to let the World Trade Organisation decide on the US' proposed sanctions. He had repeatedly said that the country would not abandon the tax.
Olivier Faure, a French representative from the socialist party, said the "unilateral decision" of Le Maire to "back off" on the tax was "shameful".