Bruno Le Maire, finance minister of France commented, the taxation methods for U.S. tech firms in European Union present major challenges for France. He discussed France’s economic challenges at CNBC’s Women’s Forum in Paris, France on October 5, 2017.
Le Maire, the recently-appointed finance minister of France is leading an initiative to entail an ‘equalization tax’ for tech companies in EU. It is a new policy that has a potential to disrupt the way tech companies are paying taxes in Europe.
He said France wants a fair trade in the world. There lies a huge challenge with the way tax imposed on GAFA (Google, Apple, Facebook, Amazon) in EU.
A major proposal filed was to impose tax on these companies based on their revenues instead of profits. Taxing based on profits would lead to paying little amount.
The ‘equalization tax’ would prevent firms from taking unfair advantage of different tax codes in 28 European member countries. Different tax codes made them pay very taxes in some countries. However, small firms in France are paying more tax as compared to larger firms.
“We are of the view that we can’t explain to small companies in France… That they are obliged to pay the taxes in France, and of course, huge taxes because we are still in France,” Le Maire said.
Tech giants such as Google, Amazon, Facebook, and others are operating in France, making profits, and contributing no or little taxes to French Treasury.
Many tech giants have established their European headquarters in EU nations which have favorable tax regimes. Le Maire outlined that demanding U.S. firms to pay the correct amount of taxes is about fairness, not financial protectionism.
Google, Facebook, Amazon and Apple have not commented on the matter yet.