France rules out tax deal with Google
France's Finance Minister Michel Sapin said France will "go all the way" to ensure that multinationals operating on its soil pay their taxes. Clrifying France's stance, he ruled out negotiating any deal with Google on back taxes, as Britain did in January. Refering to other multi-nationals that could also be evading taxes, Sapin said "We'll go all the way. There could be other cases."
Google's financial fiasco stems from debate between Google and the United Kingdom tax authorities. Its tax troubles in UK, that went on for more than six years, ended with an audit settlement on back taxes, in Jan 2016. Google had agreed to pay £130m in back taxes, dating back to 2005, an amount considered disproportionately small and condemned by many as a "sweetheart deal".
Google's European headquarters is located in Dublin, Ireland, which has the lowest corporate tax rates (12.5%) of any European nation. Google channels its European profits through Ireland, despite operational centers in many other countries, including Italy and France. This for instance resulted in it paying only €5m in corporate tax in France in 2014 compared to revenues that year of €225.4m.
Google could be forced to pay more UK tax by the EU after officials confirmed they will look into complaints from UK's Scottish Nationalist Party and Labour that the tech giant's settlement amounted to special treatment. This came hours after EU's top antitrust cop, Margrethe Vestager said that she was ready to take a look at Google's deal with the UK if someone complained.
It was estimated that European Union states lose at least €50-70bn each year to corporate tax avoidance.
European Union had unveiled plans to force large companies to disclose more about their tax affairs. The rules on "country-by-country reporting" would affect multinational firms with more than €750m in sales. As per the proposals, MNCs would have to disclose for each country within the EU, the nature of their activities, net turnover, profit before tax, income tax dues and the tax paid.
Google's offices have been raided by French authorities before, in June 2011, during an investigation into transfers to its Irish headquarters. Google France received a "notification" of the investigation back in March 2014. A probe launched in June 2015 aimed to "check" whether Google Ireland Limited, "by not declaring part of its activity carried out on French territory, has failed in its tax obligations."
Apart from Google, MNCs that are facing EU tax probes include Apple, Starbucks, Fiat Chrysler Automobiles, Ikea, and McDonald's.
French officials raided the Paris offices of tech giant Google as part of a tax fraud investigation. According to the authorities it was part of a preliminary investigation into aggravated tax fraud opened in June last year. The move comes after EU's recent attempt to crack down tax-avoidance schemes by multinational companies. France is seeking as much as €1.6bn in unpaid taxes from Google.