US Tech Giants Will Face Tax Clampdown from France and Germany

France and Germany and other partners have paired up to secure loopholes allowing U.S. tech giants such as Alphabet Inc.’s Google, Apple Inc., Facebook Inc. and Amazon.com Inc. to reduce taxes and take hold of market share in Europe, at the cost of European companies.

Tax Harmonization

French Finance Minister Bruno Le Maire stated that “Europe must learn to defend its economic interest much more firmly -- China does it, the U.S. does it.” “You cannot take the benefit of doing business in France or in Europe without paying the taxes that other companies -- French or European companies -- are paying,” he added.

The punitive action is part of French President Emmanuel Macron’s modus operandi concerning a better alignment of the 19 euro-area states’ tax systems. His approach is to lower corporate taxes to 25 percent by the end of his presidential term and at the same time, proposes countries with lower tax rates to raise them. “We’re asking other member states of the euro zone to make a similar effort in the other direction,” Le Maire said.

The Objective

Last month at a joint cabinet meeting, France and Germany discussed tax issues and on September 24, after its national election, Germany can be expected to put forward specific proposals, according to Denis Kolberg, a finance ministry spokesman.

“The objective is a common corporate tax with Germany in 2018 which should be the basis for a harmonization at the level of the 19 member states of the euro zone,” Le Maire said. According to data from Delloitte, Germany’s corporate tax rate is currently between 30 percent and 33 percent.

Reform Agenda

Cutting taxes on financial wealth, dividends and capital gains, as well as simplifying the labour market to make it more attractive to investors, are all part of Macron’s reform plan.

France plans to adopt simpler rules for a “real taxation” of tech firms at a meeting between EU officials, which will take place in September in Tallinn, Estonia.

Sources: Fortune

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