World Economy

France, Germany to Crack Down on Tech Firms Tax Loopholes

France, Germany to Crack Down on Tech Firms Tax LoopholesFrance, Germany to Crack Down on Tech Firms Tax Loopholes

France is working with Germany and other partners to plug loopholes that have allowed US tech giants like Alphabet Inc.’s Google, Apple Inc., Facebook Inc. and Inc. to minimize 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 due 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 are proving too slow, Bloomberg reported.

“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.

Germany and France discussed tax issues at a joint cabinet meeting last month and Germany can be expected to discuss specific proposals after its national election on Sept. 24, Denis Kolberg, a finance ministry spokesman, told reporters in Berlin on Monday.

The European Commission last year ordered Apple to pay as much as €13 billion ($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.

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 countries where taxes and social security payments are lower.

To that effect, Macron is renewing a broader call for the 19 eurozone states to better align their tax systems. Le Maire said that 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.

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 are aligned, that would be the basis for a wider convergence.

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