US and France accelerate plans for tech tax reform

The US and France have said they want industrialised countries to reach a deal on global tax reform this year to ensure that tech companies pay reasonable levels of corporation tax in the countries where they operate.

Steven Mnuchin, US Treasury secretary, and Bruno Le Maire, French finance minister, said in Paris that they were accelerating talks at the OECD to find a solution a year earlier than previously envisaged. Last month the OECD announced it expected to agree a solution by the end of 2020.

France has been one of the most vocal proponents of finding ways to generate more tax receipts from digital and tech companies where they make their sales, rather than where taxes are low and employees, offices and other corporate assets are located. A French national tax on the local revenues of companies such as Facebook and Amazon is due to be introduced shortly.

Mr Mnuchin said he opposed the French tax and said the issue went beyond digital companies.

But he said on a visit to Paris that he was “sympathetic” about the French dilemma.

“We’ve both instructed our teams at the OECD to try to have this issue resolved,” he said. “We are very much looking forward to the position of France that if there is a global solution at the OECD, that that would replace [the French tax], so we are hopeful that we can resolve this issue this year together.”

In December, France and Germany abandoned plans for the EU to impose a wide-ranging digital tax on tech companies in favour of a narrow levy on online advertising sales that would probably exclude Amazon and Apple.

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Mr Le Maire on Thursday appeared to abandon even this more modest European proposal — opposed by Ireland, Sweden and Denmark among others — conceding that it would not be agreed by Eurozone finance ministers at the next meeting in March.

“We can find a new agreement so that there is a common Europe position at the OECD and, with the support of the US, we can have digital taxation proposed at the international level at the OECD between now and the end of 2019,” he told Public Sénat television.

Mr Le Maire described Mr Mnuchin’s stance as “excellent news” and recalled that France had been mocked when it first proposed the idea in the interests of “fiscal equity, fairness and efficiency”. He added: “Things are moving, and so much the better.”

Mr Mnuchin and Mr Le Maire also agreed on the need for an internationally adopted minimum level of corporation tax, which is being discussed by the G7 group of big democracies.

“That’s something we absolutely support,” said Mr Mnuchin, talking of the need to avoid “a chase to the bottom” by nations seeking to attract investment with low tax rates.

Global efforts to reform the tax on digital profits gained momentum after the 2017 US tax reform, which cut the base corporate rate.



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