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France warns of digital tax chaos without new deal

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French Finance Minister Bruno Le Maire wants a global deal. Photo: REUTERS

French Finance Minister Bruno Le Maire wants a global deal. Photo: REUTERS

REUTERS

French Finance Minister Bruno Le Maire wants a global deal. Photo: REUTERS

Failure to reach a global deal on taxing digital giants such Google, Amazon or Facebook would result in countries going it alone and many digital tax regimes emerging all over the world, France's finance minister said yesterday.

The questions of where and how much to tax the digital giants topped the agenda at a meeting of finance ministers and central bank governors from the world's 20 biggest economies, the G20, in Riyadh.

Ireland does not have a seat at the G20 but is in the front line of countries set to suffer if the sweeping changes France is seeking come into force.

Outgoing Finance Minister Paschal Donohoe warned last year that global tax reforms being looked at by the G20-linked Organisation for Economic Co-operation and Development (OECD) could eventually mean €2bn a year less corporation tax paid here.

French Finance Minister Bruno Le Maire said the event in Riyadh had been very useful in establishing consensus on such global tax rules.

"For the first tine there is wide consensus among the G20 members on the necessity of having a new international taxation system," he said.

"We have to address the issue of digital companies making profits in many countries without any physical presence, which means without paying the due level of taxes."

He added: "We also have to address the key question of minimum taxation and the risk of having a race to the bottom on taxation."

France has already adopted its own digital tax, but suspended it until the end of the year to give the G20 time to work out a global deal to which all countries would subscribe.

The OECD - of which Ireland is a member - wants to agree on technical details of such a tax by July and a full agreement among the G20 is expected by the end of the year.

The organisation also wants to set a minimum effective level at which companies would be taxed and wants agreement on that by the start of July, with an endorsement by the G20 by the end of the year.

"There is a consensus to build a solution by the end of 2020," Mr Le Maire said.

"Let's be clear - either we have at the end of 2020 an international solution... clearly in the interest of all countries and digital companies, or there is no solution and... then it will be up to the national taxes to enter into force.

"Instead of having one single, simple solution, we would have many different digital taxes, all over the world."

The United States is home to most of the digital giants.

It has been wary of committing to a solution on taxing them before US presidential elections later this year.

It also has threatened to slap tariffs on French goods if Paris did not suspend the implementation of the tax.

Reuters

Reuters