France finds resistance in bid to tax digital giants
PARIS: France’s campaign to institute a new levy for digital companies such as Amazon.com and Facebook ran into early difficulties as the European Union seeks to align its tax policy with more modern and technologically focused businesses.
French Finance Minister Bruno Le Maire told colleagues at a meeting in Tallinn, Estonia, that the bloc should agree to a tax on the digital industry by next year as a matter of fairness.
Ten countries, including Germany, Italy and Spain, formally backed the initiative. Eight others, led by Ireland, had reservations, he said.
“The very, very considerable difficulties in taxation of this sector” became clear at this meeting, said Irish Finance Minister Paschal Donohoe on Saturday, explaining that any such levy should include the United States and other Group of 20 countries.
Ireland joined other nations in raising “very big questions about how such a measure could be implemented”, he said.
Traditional taxation practices have failed to capture business from an industry where value added tends to be virtual rather than material and digital companies have sought to take advantage of loopholes created by uncoordinated European regulation. Yet the opposition matters because the EU requires unanimity among its 28 members to implement tax policies.
France has proposed a temporary levy on revenue because taxing profits is complicated under international rules. Implementation of a new policy would take years, meaning it could be a while before any money was raised.
Denmark and Luxembourg were among the countries that urged the EU to proceed with caution. Malta raised the spectre of the financial transaction tax, which various French governments have been lobbying for since the financial crisis, without tangible results.
Danish Finance Minister Kristian Jensen warned that a European tax could risk driving business abroad. “I’m always sceptical about new taxes and I think that Europe is taxed heavily enough,” he said, adding that digital industry was the future.
Austrian Finance Minister Hans Joerg Schelling proposed that current discussions only applied to a temporary solution before passing that outline on to the Organisation for Economic Cooperation and Development for a more comprehensive fix.
Le Maire said he was prepared to travel to Dublin and other European capitals to discuss the issue.
The topic would be discussed at the next meeting of EU finance ministers in Luxembourg next month and the group should be ready to make a formal proposal by December, he said. Bloomberg