FIGAROVOX / INTERVIEW – The creation of a global tax on large multinationals was announced at the end of the summit bringing together G7 finance ministers. Sébastien Laye deciphers the challenges of a measure aimed at fighting tax havens and taxing digital giants.
Sébastien Laye is an entrepreneur, associate researcher at the Thomas More Institute and President of the Four Pillars Party.
FIGAROVOX. – The finance ministers of the G7 countries announced the establishment of a global tax rate on large multinationals. Many welcome a “historic” decision, do you share this opinion?
Sébastien LAYE. – If we look at the objective of the fight against tax havens, this is a historic moment. Unfortunately, this is not due to the efforts of France, to coordination within the G7 (each has gone from its small digital tax or on financial transactions in recent years, without great efficiency), but to the only American overpower which Biden’s coming to power highlighted his own reform. Paradoxically, it follows that of Trump who had already encouraged American companies to repatriate certain international profits against a single and relatively painless tax (which brought 1,000 billion in corporate profits to the United States). Biden is completing this fiscal relocation even if there is still a gap between this theoretical minimum tax (15%) and the American rate, which will rise to 25-30% according to his plans. This reform mainly attacks the digital giants who register tax boxes in tax havens: it is a question of bringing the place of profits closer to their taxation, by making tax dumping less effective. The acceleration of this subject in a few months is unprecedented in terms of international tax reform, but it stems from the digitization and dematerialization of our economies during the Covid.
The 15% threshold is high enough to destroy the concept of tax haven. It is just a question of reconnecting a dematerialized economy to tax systems still too anchored in physical activity.
This tax rate has so far been set at 15%. Is this likely to slow down the race for tax cuts and allow an effective fight against tax havens?
Some, like Oxfam, deplore a rate that is too low. On the contrary, I welcome this common sense decision, because a State has the right, in order to consolidate its competitiveness and attract investment, to have a relatively low rate, as Ireland does for example. Between this rate at 15% and the 32% (all inclusive) French, there is room for maneuver for various models. In addition, we should not overestimate the role of corporate tax in our French tax revenues, for example: at 35 billion euros; the IS represents much less than the VAT, the CSG, or the IR. And at the same time, the 15% threshold is high enough to destroy the concept of tax haven. It is just a question of reconnecting a dematerialized economy to tax systems still too anchored in physical activity.
The G7 finance ministers also explained in their press release that they wanted a better distribution of the rights to be taxed in the world. Concretely, what would such a measure mean?
This measure concerns digital companies, which for example locate their profits in England in the Virgin Islands. The aim is to better link the place of economic activity with a national tax system. It would have been ineffective for Americans to say, for example, that a Google’s profits registered in the Netherlands for an activity in France should be taxed by the United States because the company is historically American. The distribution of the rights to be taxed is not yet completed, but the idea is, whatever the place of domicile, to link the profits to the territory where they are made, and in doing so to the tax system of this country of the figure. business.
In any case, this is a fiscal negotiation cycle that is only opening up globally, and will last for several years.
While a G20 summit is being held in July, do you think that the G7 countries will succeed in getting this measure adopted by other countries, and in particular China?
China does not practice fiscal dumping, as a good heir to the Chinese PC, and therefore has no interest in opposing it. Other states could be more recalcitrant, but the strong commitment of the United States on the subject will weigh heavily. It is in any case a round of tax negotiations which is only opening up on a global scale, and will last for several years.