Le Maire: EU Eyes Tax on Tech Giants Closer to Two Percent Than Six percent of Revenue

By EU2017EE Estonian Presidency (Bruno Le Maire) [CC BY 2.0] via Wikimedia Commons

This month, the European Union will reveal plans to impose a tax on the revenues of large global tech companies at a rate that is between two to six percent. However, in a newspaper interview, Bruno Le Maire, the French Finance Minister, said that is more likely to be closer to 2 percent than to 6 percent.

Le Maire informed Le Journal du Dimanche: “A European directive will be disclosed in the coming weeks. It will be a considerable step. The (tax rate) range is 2 percent to 6 percent; we will be closer to 2 percent than 6 percent.”

To those who might say that the said measure is too modest, Le Maire said: “It’s a starting point. I prefer a text that will be implemented very quickly rather than endless negotiations. We will fine tune it later”.

A draft document of the European Commission that was seen last month by Reuters that was subject to changes before its publication was proposing a levy that is based on where the customer – instead of the company – is located. The said charge would be based on one percent to five percent of the “aggregated gross revenues” of the company.

The said proposal aims at increasing the tax bill of companies such as Alphabet’s Google, Facebook, and Amazon which are accused by large EU states of paying too little by rerouting their profits in the European Union to low-tax countries like Ireland and Luxembourg.

The government of President Emmanuel Macron has proposed to tax the tech giants on revenues instead of profits, to get around the problem that the companies reroute the profits from where they are earned to those that have low tax jurisdictions.

Germany, Spain, and Italy, together with France, are spearheading the drive for tax reform. They experience resistance from smaller nations such as Ireland who are a hub for the investments of those firms and fear that the changes could negatively affect their economies.