Thursday , August 5 2021

Tax on GAFA: the privilege of Mr Bruno Le Maire



The Time of Truth. Before joining his European colleagues at the Ecofin in Brussels, devoted especially to digital taxation, Bruno Le Maire has increased the pressure. "When there is a will, there is a way," he said emphatically. "And there is a real red line for the French government": an agreement before the end of the year to apply a tax to the giants of the Network. This project, developed by the European Commission, provides for a 3% tax on turnover.

It remains less than a month to the finance minister of France to convince the authoritarian, the next Ecofin to seal the deal scheduled for December 4th. Bruno Le Maire knows this: he is far from that agreementthe contrasts are aggressive. Today, the balance of power is clearly unfavorable to him.

The very bad surprise came from Germany. The Mayor had begun his relationship with his counterpart Olaf Scholz, who gave him an agreement in June to create a budget for the euro area, an explosive issue across the Rhine. And initially, the GAFA taxing initiative was French-German, our neighbors are also very overwhelmed to see giants in the network avoiding almost any tax in some countries (for example, 2% for Facebook for its activities outside the United States States, according to the Digital Foundation).

Lobbying of German employers

But Olaf Scholz returned his jacket after pressure from the business community. German carmakers initially feared being taxed on the data they collect to their customers. Both employers, and especially large exporters, do not want to worsen the trade war with the United States, who would consider this tax on digital champions as aggressive.

As a result, the German finance minister published a platform at Echoes, inviting to create a minimum tax on the benefits of digital activities at a global level. One way to postpone the issue in the Greek diary, the OECD negotiations last for several years. "We must return the Germans to the ship to promote our work, without them, we will not succeed," said a senior Commission official.

Especially since the Teutons are far from the only unsuspecting. The Scandinavian countries – Denmark, Sweden and Finland – are hostile to this tax, fearing that they will break the digital dynamism in Europe. The forum, published at the end of October by 16 Tech team bosses, such as Spotify, Booking or Zalendo, goes in their direction, denouncing the "harm" of taxation in their activities.

Paradise tax optimization

Ireland and Malta continue to strongly disagree with this GAFA tax. These two small countries have built up economies that are like shelters for tax optimization for large groups. And in the field of taxation, the rule of unanimity applies: only one state can block everything. That is why Brussels will propose, in January, the amendment of this rule, which will pass by a qualified majority … if all the states agree.

In short, the fight of Bruno Mayor promises to be very difficult. However, for months, the French minister has put all his energy on it. In Sofia, in May, in another Ecofin, he was already "cold anger" to his colleagues who are already opposed to the taxation of digital giants: "If you want to go to the European elections next year with the message" We talked a lot, we talked a lot but we did not make decisions ", good luck!" he warned.

No effect. Six months later, Europe seems totally powerless. While the United Kingdom is coming, solo, to announce a 2% tax on the local turnover of digital multinationals. A European stagnation that can be very expensive in polls next May …

The Time of Truth. Before joining his European colleagues at the Ecofin in Brussels, devoted especially to digital taxation, Bruno Le Maire has increased the pressure. "When there is a will, there is a way," he said emphatically. "And there is a real red line for the French government": an agreement before the end of the year to apply a tax to the giants of the Network. This project, developed by the European Commission, provides for a 3% tax on turnover.

It remains less than a month to the Minister of the French Economy to convince the authoritarian, the next Ecofin to seal the deal scheduled for December 4th. Bruno Le Maire knows this: he is far from that agreementthe contrasts are aggressive. Today, the balance of power is clearly unfavorable to him.

The very bad surprise came from Germany. The Mayor had begun his relationship with his counterpart Olaf Scholz, who gave him an agreement in June to create a budget for the euro area, an explosive issue across the Rhine. And initially, the GAFA taxing initiative was French-German, our neighbors are also very overwhelmed to see giants in the network avoiding almost any tax in some countries (for example, 2% for Facebook for its activities outside the United States States, according to the Digital Foundation).

Lobbying of German employers

But Olaf Scholz returned his jacket after pressure from the business community. German carmakers initially feared being taxed on the data they collect to their customers. Both employers, and especially large exporters, do not want to worsen the trade war with the United States, who would consider this tax on digital champions as aggressive.


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