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France battles to save EU digital tax proposal

5 month ago, 07-Nov-2018

(From left to right) European Commissioner for Economic and Financial Affairs, Taxation and Customs Pierre Moscovici, Frances Finance Minister Bruno Le Maire, European Commissioner for Euro and Social Dialogue Valdis Dombrovskis and Spains Finance Minister Nadia Calvino speak as they attend the Eurogroup Finance ministers meeting, in Brussels, on November 5. AFP photo

BRUSSELS: France said it is prepared to delay an EU-wide tax on high-tech giants in order to save a proposal that faces opposition from Ireland and Nordic countries.

Paris has been urging its European Union partners to impose a new tax to ensure that global tech platforms like Facebook and Google pay their fair share.

But Finance Minister Bruno Le Maire said France now agrees with Germany that once approved, the levy could be delayed and used as an incentive towards forging an international solution, including with the US and China.

On Monday, Le Maires German counterpart Olaf Scholz backed a European tax, but only if a broader solution was not found by summer 2020.

Arriving at a meeting of EU finance ministers in Brussels, Le Maire told AFP the draft EU law is due to be adopted in December 2018 … but we are open to postponing the entry into force to allow time for the OECD to make a more comprehensive proposal.

There is no disagreement with Mr Scholz on this. We share the same analysis, there are technical difficulties to solve and we must solve them within the next four weeks, said Le Maire.

The change of tack comes after France and the European Commission first advocated a provisional bloc-wide solution until an international scheme is found at the Organisation for Economic Cooperation and Development, which groups major world economies.

France, backed by EU-presidency holder Austria, wants a law proposal by the end of the year leaving little time to get opponents on side as European tax rules require unanimous backing by all EU members.

Paris argues the measure would be a vote-winning accomplishment for mainstream EU politicians ahead of the European Parliament elections next May, in which anti-Brussels populists could do well.

But Ireland, which hosts the European headquarters of several US tech giants, leads a small group of otherwise mostly Nordic countries that argue the tax will also punish European companies and stoke Washingtons anger.

We cannot support the proposed directive … I see no government in Sweden that would have any other opinion on this issue, said Swedens Magdalena Andersson.

Irish Finance Minister Paschal Donohoe stressed the potential reaction from countries targeted, mainly the US.

What kind of reaction would this bring if this was a model that was imposed on us? Donohoe asked his fellow ministers in a public session.

Given the way that the tax has been framed as aiming at US companies, of course there will be a reaction from the United States, added Danish Finance Minister Kristian Jensen.

The EU proposal is also intended to stop other countries going it alone with their own digital tax and creating a patchwork of schemes across the continent.

Some EU member states such as Britain, Spain and Italy are working on national versions of a digital tax, with Singapore and India also planning their own schemes.

If we do nothing, the EU will be split up like a puzzle and our European businesses will be the first to suffer, EU Economics Commissioner Pierre Moscovici told the ministers. AFP


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