France And Germany Drive EUTo Tax Digital Economy

; posted on
February 8th, 2018

The German coalition government composed of Chancellor Angela Merkel’s conservatives (CDU/CSU) and the Social Democrats (SPD) announced to step forward in the cooperation with France. One intention of this is to establish a pan-European corporate tax scheme to tax the tech giants and tackle tax avoidance through the common corporate tax base and a minimum rate.

Common Tax base & Minimum Corporate Tax Rates in Europe

In the coalition agreement, Germany announced to “support a common tax base and minimum corporate tax rates in Europe. Here we want to take initiatives with France to respond to international changes and challenges, not least to the US.” The “minimum corporate tax rate” was introduced by France and Germany in 2015, which intends to apply a basic(low) tax rate in the Europe continent to crack down low tax countries such as Ireland and Luxembourg. Since last September, France and Germany have been pushing the EU to tax the digital economy and wanted to establish such a regime by 2019. “It’s not possible, not sustainable, that we tax manufacturing industries while billions in profits earned by GAFA(Google, Apple, Facebook and Amazon) on European soil evaporate,” according to French Finance Minister Bruno Le Maire recently.

Respond from the EU Commission

The European Commission seems less radical to the digital taxation issue by circumventing replying to the comments in German coalition agreement firmly. It was examining “all possible policy options” and new rules are supposed to be published this March.“As for every business, digital giants should pay their fair share of tax in the countries where their profits are earned,”according to the Commission.

Sources: Reuters 1, Reuters 2

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