France’s Finance Minister Bruno Le Maire has urged the world’s biggest economies to reach a deal over a minimum corporate tax rate as France moves ahead with a unilateral tax dubbed GAFA (Google, Amazon, Facebook).
The UK and Italy have introduced comparable legal frameworks, But France is planning to tax turnover which would cut the possibility of US companies to list profits in tax heavens, paying a minimum to zero effective corporate tax. This does not bode well with Washington, which argues that France unfairly targets US technology giants that dominate the internet.
in response, the White House administration has ordered a so-called 301 investigation into the French plan and threatens retaliatory action against French exports.
US Treasury Secretary Steven Mnuchin favours a multilateral deal that would set a floor on the minimum corporate tax rate to be negotiated in the OECD framework.
The French G7 Presidency has chosen the motto “Working for a fairer capitalism” but neither the Canadian nor the British governments are ready to commit ahead of possible general elections later this year. The G7 economies put together represent 40% of the global GDP and if they were to adopt a common position on taxation, it could become the market standard.
Despite their disagreement on corporate taxation, the US, France, and Germany are united in their opposition to proposed cryptocurrencies, particularly Facebook’s Libra and JPMorgan’s JPM Coin. Le Maire called for a common front against Libra becoming a “sovereign currency” and ensure that all such devices abide by rules on money-laundering and the financing of terrorism.
German Finance Minister Olaf Scholz said that regulators must ensure that cryptocurrencies such as Libra must not be allowed to threaten financial stability and consumer privacy.
“The issuance of a currency does not belong in the hands of a private company because this is a core element of state sovereignty,” Scholz said ahead of a G7 meeting in France.