French Finance Minister Bruno Le Maire's effort to associate his colleagues in the European Union with a new tax for large digital retailers still does not seem to be very effective. Some countries are genuinely skeptical and disagree. Other countries, including Italy, announced their intention to continue their own bill on digital business taxes.
The Ministers of Denmark, Ireland and Sweden have said they can not support the tax in its current form and question the future of the proposal because unanimity is required for EU taxes. Ireland and Scandinavian countries remain hostile, either for fear of losing some of their resources or for legal reasons and for fear of retaliation from EU partner countries.
The draft law is a 3% turnover tax for digital companies with an annual turnover of more than € 750 million worldwide and an annual income of more than € 50 million in the EU.
This tax would be transitory until a global agreement on the GAFA profit taxation mechanism, accused of transferring profits to Member States such as Luxembourg or Ireland, is concluded.
No wonder that France believes that this proposal strongly advocates its origins with Germany. The Mayor has given concessions to those who have opposed this plan and wants the EU to wait until the global tax effort is successful before it passes through this transient European phase. He said France would support the postponement of the entry into force of the 2021 tax. It also optimized the debate among finance ministers in Brussels.
Bruno Le Maire and Giovanni Tria in Brussels on 5 November
The debate shows that we are moving in the right direction, the mayor said during a debate Tuesday. All I have to do is give Easter beer to a pub in Dublin, and I think we can follow the decision, "he said with reference to his Irish counterpart, Pascal Donohoe.
It should be noted that Germany, which initially supported the French proposal, has been more reserved since then, especially in view of the threats that the United States poses to exports.
At the end of October, German Finance Minister Olaf Scholz proposed the introduction of a global tax base for legal entities and more stringent measures to transfer funds to tax havens so businesses can prevent tax evasion through these transfers and tax optimization. We need a worldwide tax line for which no state would fall, said Olaf Scholz at Welt am Sonntag and stressed the importance of taking measures to combat tax evasion. Olaf Scholz said he has launched an initiative to help states react to tax dumping from other states, based on OECD's work on this issue.
We need coordinated mechanisms to prevent the transfer of tax havens, he said, adding that the EU is lagging behind in this area.
A few days later, France and Germany have not yet agreed to tax the turnover of large digital businesses, but Paris still hopes to reach an agreement at European level by the end of 2018, said the French Minister of Economy and Finance.
Many countries are already imposing their own taxes, which increases the risk of fragmentation of the single market. Finance Minister Giovanni Tria said the Italian tax would come into force next year if a wider agreement had not yet been concluded. Spain and the UK have already announced their own taxes.
The conflict highlights the deep differences within the bloc, as EU governments are striving to find a balance between attracting lucrative businesses and dealing with popular dissatisfaction with companies that do not pay their fair share. Traditional tax systems have not yet captured the revenue of world companies, but have reduced physical presence and have sparked the anger of dissatisfied readers after years of slow growth and low wage growth.
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