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Berlin and Paris support US proposal on taxation of multinationals

Berlin and Paris support US proposal on taxation of multinationals

France and Germany support the US proposal for a global minimum tax on corporate profits of 21%.


France and Germany support the U.S. proposal for a global minimum tax on corporate profits of 21 percent, the two countries’ finance ministers announced in an interview published Tuesday, April 27, in the weekly Die Zeit. This is the first time the two governments have expressed their support for such a floor rate.

“People are fed up with big companies not paying their fair share of taxes,” Frenchman Bruno Le Maire told the German newspaper. France had recently mentioned a tax rate of 12.5 per cent, he recalled. But if the 21% rate suggested by Washington “was the result of negotiations, we would agree,” he added.

His German counterpart, Olaf Scholz, said he had “nothing personally” against the American proposal. The two ministers said they were confident of reaching an agreement “this summer” on the subject at the Organization for Economic Cooperation and Development (OECD).

Negotiations are underway within the OECD to establish a system of minimum international taxation for companies and to put an end to the tax dumping they engage in around the world. The project has been promoted for several weeks by the United States, which is seeking to raise its corporate taxation to finance a massive infrastructure plan. The goal is above all to increase the contribution of digital companies, accused of escaping taxes thanks to the differences in taxation between countries.

European directive

If the negotiations succeed, France has already said it will adopt a European directive on the subject in the first half of 2022, during the French presidency of the Union. Its minister has also warned that he would “withdraw” the GAFA tax in case of success. This tax on digital companies, mainly American, has been a subject of tension between France and the United States in recent years. If it fails, “we will keep it,” he added. In mid-April, the European Commissioner for the Internal Market, Thierry Breton, had hailed the American proposal as an “elegant solution”.

Such an agreement could bring more than 100 billion dollars (84 billion euros) into the coffers of governments each year, which have been hard hit by the Covid-19 pandemic and the shutdown of the world economy.

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