Taxing GAFAs with a minimum tax, Germany's new idea

Olaf Scholz, German Finance Minister, wants a worldwide minimum tax on the profits of multinationals. It targets the American digital giants.

This is Germany's new idea. Minister of Finance Olaf Scholz wants a worldwide minimum tax on the profits of multinationals.

The Minister of the Merkel government is particularly interested in the lucrative profits made by GAFAs (Google, Amazon, Facebook, Apple) and other digital platforms such as YouTube or Airbnb, which are largely beyond the reach of the fisks of the countries where they mainly operate.

Digital technology "aggravates a problem that we are well aware of with globalization and that we are trying to thwart: the location of profits in tax-efficient countries," the minister explains. Objective: to help states respond to the tax dumping of other states, building on the OECD's work on the subject.

"We need coordinated mechanisms to prevent income from moving to tax havens," he argues, also considering that the EU is lagging behind in this area.

The "yes but" of Bruno Le Maire

Germany has already shown its reluctance towards the French project to tax GAFAs up to 3% of income from certain activities, in particular advertising and the resale of personal data.

On Sunday, the Minister of Economy, Bruno Le Maire, commented on Olaf Scholz's statements. "I am in favour of the proposal made by the German Finance Minister, which is to say: there must be a more harmonious global system," Bruno Le Maire reacted on France 3.

"But let's not dream, it's not tomorrow the day before, so in the meantime, what I want is to decide by the end of this year (...) on the taxation of digital giants, already at European level," he added.

The proposal currently under discussion, presented in March by the European Commission, provides for a tax on the turnover of Internet giants until a global solution is negotiated within the Organisation for Economic Cooperation and Development (OECD).