Germany’s finance minister wants tech giants to pay higher taxes

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The EU has long been pushing tech companies to pay more in taxes.
Photo: Ste Smith/Cult of Mac

In an op-ed for a German newspaper, Germany’s finance minister Olaf Scholz proposes a global minimum rate of corporation tax as one way to ensure that multinational corporations like Apple pay domestic taxes in line with the profits that they earn.

The European Union (EU) has long been attempting to get tech giants to stop using complex accounting tricks to shuffle profits around to minimize the amount that they pay in each country.

Scholz’s Welt am Sonntag article is part of a larger attempt to harmonize tax rates across the EU. This has proven less popular in member countries which have lower taxation levels, such as Ireland.

“We need a worldwide minimum tax level that no state may go below,” Scholz said in the article. He noted that the internet economy exacerbates, “a problem that we recognize from globalization and that we are trying to address: the placing of profits in low-tax locations.”

It’s not clear whether this will be seriously considered as a piece of legislation at some point. However, the fact that a senior politician in one of the EU’s most powerful member countries would voice this opinion suggests that there is a good possibility.

Apple vs. EU

This isn’t the first effort to introduce changes to tax to stop companies being able to shift around profits to avoid paying tax. At the beginning of this year, French Finance Minister Bruno Le Maire discussed a plan to tax tech multinationals at between 2 to 6 percent of their global revenue. “It’s a starting point,” he said at the time.

Back in August 2016, the EU handed Apple a 13 billion euros ($15.5 billion) tax bill, claiming that the company took advantage of illegal state aid that allowed it to route profits through Ireland. The investigation alleged that Apple paid the equivalent of as little as 0.005 percent on all European profits in 2014. Apple has paid the sum in full, although this will be held in escrow until the matter is settled in court.

In January 2018, Apple Europe separately agreed to pay an additional $186 million, including interest on unpaid tax, after an “extensive audit.” This was carried out by HM Revenue and Customs, the U.K. government department responsible for the collection of taxes.

Apple executives have always insisted that the company pays every cent of its global requirements.

Source: Welt am Sonntag

Via: Reuters