Business

Rich nations agree plan on digital tax

Rich nations agree plan on digital tax

Chantilly, France: 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 horse-trading — 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.

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.

‘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.