France says deal possible on 15% tax rate for multinationals

PARIS (AFP) – French Finance Minister Bruno Le Maire said on Tuesday (Oct 6) a deal on a minimum tax rate of 15 percent for multinational firms is possible, days before an international meeting on the issue.

A breakthrough in efforts to stem multinationals’ ability to slash taxes by shifting revenues through nations with low rates came in July, when more than 130 states agreed to a minimum 15 per cent rate.

But a number of countries, including in particular Ireland, have held up the reaching of a consensus and fuelled speculation that the minimum rate could be lowered to reach a deal.

“A compromise might be reached around a 15 per cent effective tax rate,” Le Maire said in a conference call.

That “would eliminate attractive effective tax rates on the order of two, five or six percent that are offered by certain countries, including in the European Union,” he added.

The July breakthrough envisaged the minimum 15 per cent tax rate would apply to multinationals with at least 750 million euros (S$1.2 billion) in sales, which in practice means many big tech firms would be hit.

Ireland, which has attracted the European headquarters of many international firms with a 12.5 per cent corporate tax rate that in practice can be lowered, has so far resisted a compromise.

“It will be difficult to go above” 15 per cent without losing the holdouts completely, a source close to the talks told AFP.

The other pillar of the reform would give countries a share of the taxes on profits earned in their territory.

The objective of the Friday meeting under the auspices of the OECD, which has been shepherding the talks, is to bring on board the holdouts that include Hungary and Estonia as well as Ireland, to allow the minimum tax rate to go into effect in 2023.

A number of countries are ready to move forward with national taxes targeting tech firms if a minimum tax deal is not reached on an international level.

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