Bruno le Maire.    Picture: REUTERS
Bruno le Maire. Picture: REUTERS

Paris — France is working with Germany and other partners to plug loopholes that have allowed US tech giants like Alphabet’s Google, Apple, Facebook and Amazon.com to minimise taxes and grab market share in Europe at the expense of the continent’s own companies.

France will propose the "simpler rules" for a "real taxation" of tech firms at a meeting of European Union officials set for mid-September in Tallinn, Estonia, French Finance Minister Bruno le Maire said in an interview in his Paris office on Friday, complaining that Europe-wide initiatives were proving too slow.

"Europe must learn to defend its economic interest much more firmly — China does it, the US does it," Le Maire said. "You cannot take the benefit of doing business in France or in Europe without paying the taxes that other companies — French or European companies — are paying."

The push reflects mounting frustration among some governments, regulators and, indeed, voters, at the way international firms sidestep taxes by shifting profits and costs to wherever they are taxed most advantageously — exploiting loopholes or special deals granted by friendly states.

The European Commission last year ordered Apple to pay as much as 13 billion euros ($15.3 billion) plus interest in back taxes, saying Dublin illegally slashed the iPhone maker’s obligations to woo the company to Ireland. Apple and the Irish government are fighting the decision.

Harmonising taxes

The clampdown on tech firms is part of President Emmanuel Macron’s muscular approach to ensuring a level playing field, after seeing first hand during his election campaign how French firms struggle to compete with companies in countries where taxes and social security payments are lower.

Macron is renewing a broader call for the 19 eurozone states to better align their tax systems. Le Maire said Macron’s pledge to lower corporate taxes to 25% by the end of his five-year term should be seen as an opening gambit in this process. He urged countries with lower tax rates to raise them.

France was making "a considerable effort", Le Maire said. "We’re asking other member states of the eurozone to make a similar effort in the other direction."

Again, the country’s historic alliance with Germany is at the heart of Le Maire’s plan to bring around other EU countries. He said once the eurozone’s two biggest economies were aligned, that would be the basis for a wider convergence.

"No later than 2018 we should be able to have a common corporate tax with Germany which should be the basis for a harmonisation at the level of the 19 member states of the eurozone," he said.

Germany’s corporate tax rate is currently between 30% and 33%, according to Deloitte.

No protectionism

Macron is also cutting taxes on financial wealth, dividends and capital gains, while simplifying labour rules as he tries to make the country more attractive for investors. The government will also reform the pension system and unemployment benefits, and will seek to boost housing construction to reduce real estate prices, the minister said.

Le Maire rejected the idea that his government’s intervention in corporate decisions amounted to protectionism, saying Macron had decided to block Italian shipbuilder Fincantieri’s bid for French shipyard STX last month only because it was of strategic importance to France.

Talks with Fincantieri were continuing and France aimed to find a solution by the end of next month, Le Maire reiterated.

He said he hoped for closer co-operation between French and Italian military shipbuilders and, ultimately, the creation of a "large European naval group" based on a Franco-Italian alliance.

Bloomberg

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