German Finance Minister Olaf Scholz and French Finance Minister Bruno Le Maire said on Wednesday 26 May that an agreement on international tax reform was possible by the G20 summit in July. Such a positive outcome requires a prior agreement at the ‘G7 Finance’ next week in London.
Mr Le Maire called on the European Union’s international partners to seize this “historic opportunity” made possible by the change of attitude and constructive proposals from the US administration (see EUROPE 12724/9). According to him, the three conditions for reaching an agreement are within reach, namely: - a comprehensive agreement on taxation of the digital sector (pillar 1) and minimum taxation (pillar 2); - setting a “credible” minimum rate, with the 15% threshold suggested by Washington as a “solid basis”; - including “all major digital companies” in the first pillar.
“We are very close to an agreement”, Mr Scholz said, referring to almost daily negotiations. He said that the big digital companies should pay “their fair share of taxes” so that States have sufficient resources to deal with the crisis arising from the Covid-19 pandemic and invest for the future.
Asked about possible intra-European reluctance from, for example, Ireland, the German Minister also said he was “confident” that an international agreement would then be introduced at EU level.
Climate Club. Mr Scholz also spoke of his proposal to set up a club of countries including “the US and important trading partners” of the EU to make progress on climate change without exacerbating trade tensions. The Club would develop minimum standards for carbon pricing and introduce a Carbon Border Adjustment Mechanism, he said.
Mr Le Maire supported the German idea, which shows a transparent and constructive approach of the EU towards its strategic partners. But he warned: “Given the wide disparities in carbon prices, the EU will not wait for China or the US to achieve climate neutrality”.
While they will hold a Franco-German Economic Council this Thursday, the two leaders called for a pilot project to be launched this year leading to the eventual creation of a digital euro. Such an initiative, according to Le Maire, will increase the euro area’s sovereignty over payment markets and, according to Mr Scholz, will benefit both consumers and businesses. (Original version in French by Mathieu Bion)