German and France want to block all tax loopholes

Aug 8, 2017 09:01 GMT  ·  By

US tech giants have long been criticized for turning to tax dodging schemes, but these tactics might come to an end later this year if a new approach that France and Germany are working on is being adopted by all members of the European Union.

Specifically, the two countries are seeking what they describe as “real taxation,” planning to adopt simpler rules that would block companies from turning to loopholes in order to avoid paying taxes, or to reduce them, in markets across the Old Continent.

It turns out that France and Germany have already discussed the possibility of revising tax regulations last month, and German finance ministry spokesman Denis Kolberg has been quoted as saying by Bloomberg that all proposals would be further analyzed after the German elections in late September.

Apple, Google, Facebook the biggest targets

France, in particular, calls for all members of the European Union to adopt new regulations that would block companies from turning to tax dodging schemes. President Emmanuel Macron made cutting domestic corporate tax rates by 25 percent one of his priorities during the campaign, and plugging loopholes in tax regulations is now at the top of his agenda.

"Europe must learn to defend its economic interest much more firmly — China does it, the U.S. does it," French Finance Minister Bruno LeMaire said. "You cannot take the benefit of doing business in France or in Europe without paying the taxes that other companies —French or European companies —are paying."

Apple in particular is a big target of the new regulations, as the Cupertino-based company has recently been ordered to pay $15.2 billion following a tax scheme that involved Ireland. The European Commission ruled that Apple had been granted illegal tax benefits in the country, but with both the iPhone maker and Ireland appealing the decision, it would take a long time until a final ruling is made.

In addition to Apple, other tech giants like Google, Facebook, Amazon, and even Microsoft are said to be in the cross hairs of the new tax initiative, as all have been accused of turning to financial maneuvering to minimize taxes.