Germany wants to halt US tech giant tax evasion: Report

Germany and France will push a crackdown on tax evasion by multinational tech giants, according to a report.

Germany's Minister for Finance Olaf Scholz has told newspaper Welt am Sonntag that the nation is proposing to crack down on tax evading multinationals by instituting a global minimum corporate tax rate in addition to preventative measures against the use of tax havens.

According to a report by Reuters, Scholz is considering the proposals alongside the French government.

"We need a worldwide minimum tax level that no state may go below," Scholz said in the Welt am Sonntag article, adding that the tech industry is "exacerbating a problem that we recognize from globalisation and that we are trying to address: The placing of profits in low-tax locations".

According to a report by Yahoo, France's Minister for Finance Bruno Le Maire said he would be encouraging other European Union members to support such a tax.

In October last year, the European Commission had launched a public consultation to help it determine a "unitary tax" for multinational companies operating across the EU.

Such a system would levy tech giants on their global profits, divided between the EU nations where they run their business.

"The current tax framework does not fit with modern realities. It was designed in a pre-computer age and cannot capture activities which are increasingly based on intangible assets and data," the European Commission said a year ago.

"As a result, there is the risk of shrinking tax bases for Member States, competitive distortions for businesses, and obstacles for innovative companies."

Tech giants have been facing tax-evasion backlash globally over the past few years, with the Australian government in May using its 2018-19 Budget to ensure multinational technology companies are paying taxes in Australia.

"The next big challenge is to ensure big multinational digital and tech companies pay their fair share of tax," former Australian Treasurer cum Prime Minister Scott Morrison said at the time.

"Over the past year, I have been working with counterparts at the G20 to bring the digital economy into the global tax net. In a few weeks' time I will release a discussion paper that will explore options for taxing digital business in Australia."

According to the Australian government, it has used its Diverted Profits Tax (DPT), Multinational Anti-Avoidance Law (MAAL), and Tax Avoidance Taskforce to raise around AU$5.2 billion in tax liabilities from large companies since July 2016.

"Globalisation and digitalisation of the economy present challenges for the international and Australian tax frameworks. Under existing frameworks, digital businesses can have a significant economic presence in Australia without making a significant contribution to tax revenues here," the Budget papers said.

"The government is taking action to ensure the integrity of Australia's thin capitalisation rules, which limit the amount of debt deductions multinational entities can claim in Australia. The government will improve the integrity of these rules by ensuring that asset valuations used to justify debt deductions are robust and that inbound investors cannot access tests that were only intended for outward investors.

"The government will strengthen the definition of a large multinational (or Significant Global Entity) to ensure that it operates as intended. This will ensure that large multinational businesses that are ultimately owned by private entities or investment entities are not inadvertently excluded from the application of tax integrity rules.

Morrison had in March used a G20 finance minister meeting to highlight Australia's multinational tax avoidance scheme, pushing his counterparts to work together on ensuring multinational tech companies like Google, Apple, and Amazon are properly taxed.

Tech giants have faced similar tax-evasion allegations in Korea, New Zealand, Ireland, France, and Brazil, among other countries.

Related Coverage

Canberra unrepentant on Amazon: If you sell into Australia, you have to pay tax

Australian Treasurer Scott Morrison says Amazon has taken a commercial decision to block Australians, and that's fine.

LG office raided in tax evasion probe

LG Group's headquarters has been raided by prosecutors for alleged tax evasion.

Google denies Korean tax evasion allegation

Google has strongly denied an allegation by the founder of Naver, South Korea's largest search giant, that it doesn't pay proper taxes in the country.

Ireland expected to recover disputed taxes from Apple in Q1 2018

Up to €13 billion in disputed taxes will be transferred from Apple to a third-party account in the first quarter of 2018, Ireland's Finance Ministry has said.

Brazilian company uses drones to reduce property tax evasion

The equipment is being used to measure units and recalculate payments due to the government

Google's billion-euro tax bill discharged by French court

Google has won its French tax evasion court battle, with the Tribunal Administratif de Paris ruling that the search giant does not have sufficient operations in France to warrant paying the additional taxes.

5G technology: A business leader's guide (Tech Pro Research)

It's still early days for 5G services, but as they're being trialed and deployed, they're on track to have a far-reaching impact for both consumers and businesses.