“This is a completely revolutionary deal.”Christian Chavagnox, editorialist economist at Alternative Economics in France, justifies on Thursday, July 1, after 130 countries signed an agreement paying a 15% minimum tax on the profits of multinational corporations. This agreement “Earn 7 billion euros a year, it’s not easy”, He continued. It also helps to distribute profits more evenly between the countries where these large groups are headquartered and the countries in which they operate. This is a factor that directly targets the digital giants. “All countries that do not implement this agreement will see the money go to the foreign tax authorities. This will not be a good policy.”
franceinfo: Is this deal really historic, as Bruno Le Meyer says?
Christian Chavagnex: This is a completely revolutionary agreement because it lists two key principles that do not yet exist. First, you may be a multinational company that is not in France, you artificially transfer your profits to tax bases, and we will force you to return the tax revenue to France. The second revolutionary principle is that we establish a minimum tax rate on profits made by multinational companies abroad. These large corporations use tax bases to levy 1, 2, 3% tax. The contract says it will be at least 15%. So, if they impose a 3% tax, France can take the difference between 3 and 15%, and when you take it all in, we had a recent note that, as the Minister made clear, it should bring us about 7 billion euros a year, which is not trivial.
Only 130 countries have signed up. This means that there are countries that have refused to sign this agreement. What are the possible consequences of implementing this?
Any. The consequences will be theirs. There are 130 countries out of 139. Unfortunately, there are a few European countries, including Ireland, Hungary and Estonia, as well as some countries like Barbados. But we do not need their agreement to apply this agreement. Because the French tax authorities, if they say tomorrow: ‘You settled in Ireland, thank you Ireland, you have a rate of 3 to 4%, I will take the difference between 3 to 4% and 15%.’ If Ireland does not do this with these multinationals, the tax authorities from other countries will be able to recover the money. So all the countries that do not implement this agreement will see the money going to the foreign tax authorities. This is not really a good policy.
Why sign important countries at the bottom of the page?
This is the American presence. Although Bruno Le Meyer, with his GAFA tax, almost broke the whole debate, this is the reality. Unfortunately, Biden’s United States said: ‘We are prepared to impose this global tax on our own companies that have hidden their profits in European tax bases.’ France and Germany are recovering their tax bases from Google and Facebook. Europe has a little bit of a chain behind it because it is led by the US. Although the tensions between the United States and China are as strong as we know them today, we see the United States and China as major emerging nations capable of large-scale reconciliation. The direction of the global public good. We are going to give back the tax base and budget revenue to all the major countries. Germany and we will take advantage of this. All major developing countries will benefit. We can finance our pensions and finance whatever we need. It’s an agreement that changes the rules of the game to tax multinationals. It’s been a century since we knew that.
Companies in history, losers or winners?
Without the agreements, France would have had the GAFA tax, and so would Australia. The Indians did the same. Italians, English. We would have had a multiplication of national taxes, which would have been obligatory to negotiate with these big companies, I do not know how many tax authorities around the world. But all over the world there is an organization that sets the rules and everyone is equal. There are thousands of multinational companies that affect this minimum rate. I think it would be good for them even if they pay a little more tax.