Google, Amazon, Facebook & Apple must pay taxes in countries where they earn money even if they do not have a physical presence.
Today the finance ministers and the governors of the G7 central banks (Germany, Canada, the United States, France, Italy, Japan and the United Kingdom) reached a consensus to approve the so-called “digital tax” . This will require that large technology companies that have digital operations have to pay taxes in those countries where they have activity, regardless of whether they are physically present.
The French Finance Minister, Bruno Le Maire, announced the details of this new law that will tax the digital activities of the so-called “technological giants”, such as Google, Amazon, Facebook or Apple, for the revenues accumulated within a country. even if their headquarters are located elsewhere . This measure was denounced by the United States as “discriminatory”, since, they say, it mainly affects US companies.
The agreement also stated that there should be a minimum level of tax payment in each country , which would prevent a country from attracting businesses from digital multinationals by taxing less and being more attractive. This “minimum tax” was not closed at this meeting and will be analyzed later.
According to Le Maire, the objective of this new “digital tax” is to put an end to aggressive tax competition between countries , and thus prevent certain companies from finding ways to avoid paying taxes.
This decision comes after France approved a 3% tax on the big technology , which caused the discontent of the United States and an investigation , which led to the threat of imposing new tariffs on French products .
Le Maire said that France will maintain its tax until the new internationally agreed digital tax replaces it, which is estimated to happen in 2020 , when the next G20 meeting seeks an international agreement that would be overseen by the Organization for Cooperation and Economic Development (OECD).
Serious concerns against Libra
On the other hand, during this G7 meeting “serious regulatory and systemic concerns” were raised against Libra, the new currency prepared by Facebook with the support of several companies . Le Maire mentioned that this type of initiatives should be “regulated as strictly as possible” to ensure that they do not affect the global financial system .
To make it clear, the G7 opposes the idea that companies can have the same level of privilege as countries in terms of creating means of payment , since, they say, they would not have the control and obligations that entails. “We can not accept that private companies issue their own currencies without democratic control,” Le Maire said.
Some of the concerns revolve around the fact that a digital currency, driven by Facebook, can weaken governments’ control over monetary and banking policies , as well as pose security risks. For example, they claim that Libra could be used in money laundering, terrorist financing and other practices that are now part of the “public policy priorities”.
Jens Weidmann, president of the Deutsche Bundesbank and member of the Governing Council of the European Central Bank, mentioned :
Today the process of international regulation of the stablecoins has begun, it is not a question of rethinking innovative concepts, we are open to technological developments and the stablecoins offer opportunities for economic prosperity, so there is no reason to be alarmed, but to be alert.