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Gafa tax: G7, Paris and Washington move closer to an agreement

2019-08-26T12:17:30.512Z

Gafa tax: G7, Paris and Washington move closer to an agreement



Biarritz (AFP)

A temporary compromise, pending an international solution: Paris and Washington seemed close to an agreement Monday on the taxation of digital giants, after a weekend of delicate negotiations on the future of the tax "Gafa" at the G7 summit in Biarritz.

No more invectives and threats of retaliation between the two trading partners? France and the United States "approach" an agreement, assured Monday the American president Donald Trump on the sidelines of a bilateral meeting organized in the French seaside city.

The French "want an agreement and we'll see if we get there, we're close," said the US president, who had threatened to tax French wine in retaliation for the Gafa tax (acronym for giants Google, Amazon, Facebook and Apple), which comes into force in France this year.

According to sources close to the discussions, the issue was discussed at a meeting Saturday between US Treasury Secretary Steven Mnuchin and the French Minister of Economy Bruno Le Maire, who received his counterpart in his home in Saint-Pee -sur-Nivelle, a village located a few kilometers from Biarritz.

The subject was discussed again Sunday evening during a dinner held at a restaurant in Biarritz between Bruno Le Maire, Steven Mnuchin, US Secretary of Commerce Robert Lighthizer and Donald Trump's economic adviser to the White House, Larry Kudlow.

During these meetings, "a proposal was made" for a compromise on the taxation of digital giants, said a source close to discussions at AFP. "It is now up to heads of state to seize", said this source.

Definitively adopted on July 11th, the tax called "Gafa" creates a taxation of the big companies of the technological sector not on the profit, often consolidated in countries with very low taxation like Ireland, but on the turnover.

This mechanism, set up pending the harmonization of rules at the international level, under the auspices of the OECD, provoked strong reactions on the American side. A Donald Trump advisor spoke of "big mistake", while the US president said the device was "very unfair".

- tax "very imperfect" -

According to the source close to the discussions, the proposal developed in Biarritz provides for a possible reimbursement by France of the difference between the Gafa tax and the tax system discussed in the OECD, once it has been established.

In concrete terms, the French tax administration would look at how much the companies paid with the Gafa tax, and how much they would have had to pay with the international tax formula. "If ever there is a difference to the detriment of companies, we would make refunds," said the source close discussions.

The Gafa tax, amounting to 3%, must affect thirty major groups, mostly American, but also Chinese, German, Spanish or British. According to Bercy, it should bring France 400 million euros this year, then 450 million in 2020 and 550 million in 2021.

This tax is "very imperfect", acknowledged Sunday in Biarritz Emmanuel Macron, recalling that this device, of a temporary nature, would disappear from the entry into force of an agreement between the countries of the OECD. "It's much smarter to have international taxation," he said.

For several months, the work has accelerated within the OECD, where 134 countries are discussing the future framework to put in place to fight tax evasion of digital multinationals.

According to a source close to the file, a compromise solution is under consideration, which could be presented before the meeting of G20 finance ministers in mid-October.

The United States, which had been blocking negotiations for years, has indeed paved the way for the search for a global agreement on the risk of multiplication of taxation projects for digital giants by countries like France, Spain or the United Kingdom.

"I am open to discussing how we can do it." But "we must do something to tax fair and appropriate activities online," said British Prime Minister Boris Johnson on Saturday in Biarritz.

© 2019 AFP

Source: france24

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