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| G7 ministers reached consensus on steps towards taxing the digital giants amid differences between the US and France and Britain. (AFP Photo/ERIC PIERMONT) |
Chantilly (France) (AFP) - Ministers from G7 top economies on Thursday reached consensus on steps towards an accord on taxing digital giants, an issue that has divided the United States and its allies Britain and France.
French
Finance Minister Bruno Le Maire, who hosted the two-day meeting in Chantilly
outside Paris, hailed the consensus as unprecedented, although US Treasury
Secretary Steven Mnuchin insisted there was more work to be done.
The French
parliament this month passed a law that would tax digital giants for income
amassed inside a country even if their headquarters are elsewhere, a move the
United States complained discriminated against US firms like Google, Apple,
Facebook and Amazon.
Britain has
announced plans for a similar tax and the G7 meeting in the tranquil French
town -- usually famed for its horses rather than horsetrading -- was dominated
by tough talks to find some common ground.
Le Maire
said finance ministers and central bankers had reached an agreement "to
tax activities without physical presence, in particular digital
activities."
"This
is the first time that G7 members agree in principle on this," he told
reporters.
'Minimum
tax'
France
issued a statement saying the G7 had agreed a two-pronged solution --
confirming the principle of companies being able to accrue revenues outside
their legal base but also on a minimum tax to be agreed internationally for
their activities.
Ministers
"fully supported a two-pillar solution to be adopted by 2020", the
statement said.
"Ministers
agreed that a minimum level of effective taxation... would contribute to
ensuring that companies pay their fair share of tax," it said.
A French
official, who asked not to be named, said the tax rate would have to be agreed
in the future.
German Finance Minister Olaf Scholz said he was happy with the "progress" achieved and in particular with the reference to the minimum tax level in the final statement.
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Forecasts
for revenue the French government expects from its tax on tech
giants, which it
has said it will drop if an international deal is implemented
(AFP Photo/Thomas
SAINT-CRICQ)
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German Finance Minister Olaf Scholz said he was happy with the "progress" achieved and in particular with the reference to the minimum tax level in the final statement.
Further
talks would now be needed in the wider context of the G20 group of top
economies for an international agreement which would be overseen by the
Organisation for Economic Cooperation and Development (OECD).
Scholz
expressed hope that a full international consensus could be reached next year
under the OECD.
'Step
forward'
The French
parliament's move infuriated President Donald Trump and the US had announced an
unprecedented probe against France which could trigger the imposition of
tariffs.
Mnuchin
struck a slightly more cautious tone than his French counterpart Le Maire while
making clear he was well satisfied with the talks.
"We
made some significant progress at this meeting, there is more work to be
done," Mnuchin told reporters, adding that ministers had made a "big
step in the right direction".
He said the
United States has "significant concerns" with the French law and
planned British legislation and was pleased that both Paris and London would
dump the domestic laws if an international agreement was forged.
"Everyone
here wants to reach an acceptable international solution," said Mnuchin.
"Creating certainty for global multinationals is very important," he
added.
Tim Wach,
managing director of global tax consultants Taxand, described the progress as
"highly encouraging" and "significant steps" in building a
fairer tax system.
“The G7
must avoid conflicting regimes across different countries," he said.
'Warning
on Libra'
The G7
ministers had far less trouble agreeing a position on new cryptocurrencies such
as Facebook's Libra, saying such new and untested digital money risked
destabilising the international monetary system and were not ready to be
implemented.
"They
agreed that projects such as Libra may affect monetary sovereignty and the
functioning of the international monetary system," the French statement
said.
The other
key issue at the meeting was finding a replacement for Christine Lagarde, who
has led the International Monetary Fund since 2011 but has resigned to become
head of the European Central Bank.
Le Maire's
European colleagues at the G7 have decided he should lead the search for a
candidate from Europe, although no shortlist has been fixed yet, said a
European official.
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