In the debate of how to deal with tech giants, French President Emmanuel Macron has finally spoken up. His statements criticizing the tax status of these major technology companies came in late August just before the G7 meeting.
What Macron Said
Macron was evident in his criticism of the way corporate taxation of tech giants is treated when he talked to reporters. He indicated that he does not believe the worldwide tech players financially contribute to the common good. He went on to say that this is not sustainable. Macron referred to the tech giants as having “permanent tax haven status,” something which he says should stop.
The French Law
A month before Macron’s statements, France passed a law that involves taxing digital companies. This is regardless of the location of the headquarters of the digital companies. Because of the framing it presents, the law affects any global giant that operates in France, even if they are based in other countries. That includes American-based giants, such as Apple, Facebook, Google, and Amazon.
The idea behind the French law is to stop the taxation gap that allows some of the major tech companies to pay almost nothing in taxes in Europe. This low corporate tax is despite the enormous profits made in those European countries. The low tax is due to these companies having their legal base in smaller European Union countries with looser tax regulations.
Discussions With the United States
Because of the way that this French tax law affects companies based in the United States, Macron had some discussions with U.S. President Donald Trump. Trump was vocal in his criticism of the tax on digital companies. France had hoped that it would be able to come to an agreement with the United States. However, an agreement on taxing digital activities before the G7 meeting did not happen.
Macron’s Plans for the Future of the Tax
Macron and France as a whole have said that they are willing to withdraw the tax they passed, provided certain conditions are met. This would need an international agreement of some sort. Ideally, all of the OECD countries would be in agreement, and they could reach that compromise by the time 2020 comes to a close.
Other Criticisms on the Tax
Trump is far from the only person to criticize France’s moves to tax digital companies. There are numerous arguments against it, such as the fact that not all tech companies are equal, so they should not all be treated the same. Those who argue this point would prefer a more significant debate about potential policies and incorporating innovative ideas.
Opponents of the tax also point out the way that digital services continue to change and change the world. There are also criticisms of a revenue-based tax, which is what France enacted and proposed by many other countries. Some point to the lack of evidence that digital companies consistently pay lower rates. There are undoubtedly big-name examples, like Apple and Amazon. But, these critics argue that it would be unfair to punish smaller and medium-sized digital companies for the low rates of these giants.
Arguments for the Taxes
The main point of those in favor of the taxes is that these major digital companies are costing the local economies and governments a source of revenue. They operate within France (or another jurisdiction) and make money from the people living there, but pay minimal tax. Their presence also forces local businesses to close, reducing potential tax revenue. It also eliminates prospective income tax revenue from the employees of those businesses.
The debate on how to tax international tech giants will likely continue for at least the coming years, and the future of this type of taxation is still uncertain.
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