Taxation and Geopolitics

Tax evasion, is one the most important problem in the international scene. In a globalised world as ours, borders are getting more blurred than ever and the advantages for big companies such as GAFAs are more and more important. Since the beginning, those big companies are getting more and more important because of their benefits […]

Tax evasion, is one the most important problem in the international scene. In a globalised world as ours, borders are getting more blurred than ever and the advantages for big companies such as GAFAs are more and more important. Since the beginning, those big companies are getting more and more important because of their benefits but also of data they got from users. This question, is at the center of different policies and projects linked to the tax system, since a decade. Now, the question is about to know how to quantify and tax something which is immaterial ? GAFAs represent billions and billion of dollars, since its market capitalisation apple represent by its own about 1000 billion dollars.

Interests and relations between each state are linked by economic policies. Effectively, China and the United States are acting by embargo’s threat and by closing markets for products from both countries. Specialised organisation struggle to find any fair agreements responding to the general wills.During the summer 2019, because of the lack of international means to get a solution, France took lead in getting any answers to this question and make its own tax system toward GAFA. Because of the reaction of the president of the United States, Donald Trump we can see how straight the link between taxes and relations between counties gets stronger.

This French initiative had for consequences to relaunch tensions between France and the United States which point of view is different about that point. The French will to tax those big groups (GAFA) get harder because of the lack of international agreements (OECD main roles) and the need to handle these big companies which have a lot of advantages in the European Field such as in Ireland. The French tax targets companies having an annula turnover upper to 750 millions of euros worldly, and 25 millions of euros at the French level. The tax would be applied at the rate of 3% of the turnover realised in France.

The Unites States considers that there are Americans companies targeted and perceive this tax as being discriminatory. This unilateral aspect led to France to be in the line of sight of the United States which threat to tax about 100% of product from France which would represent 2,4 billion of dollars, including luxury, wine etc. In order to avoid any probability to get in a commercial war with the United States, the French president Emmanuel Macron interviewed with Donal Trump for stabilising the situation.

This problem highlights that because of this strong multilateralism, the international boded have few chances to get into any agreements or establishing regulations form the power and influence of the different actors. Agreements obtained during the meeting of the G20 in Japan and G7 in Biarritz have permitted to find a middle ground which would permit to the OECD to make cornet project and give substance to consumer countries but also by introducing a minimum tax rate in global scale.

Europe shows its solidarity to France, if American reprisals would be applied, France has to get the huge majority of the 26 member countries of the European Union, especially the one from Germany which will see American custom duties to its car exportations. However, this solidarity comes to address this threat to the European Market and European exportations, and echoes to the small steps principles at the origin of the European Union. These questions are relative to taxes and the banking sector are always done with the participation of the USA , the question is to know if this in this case of GAFA, the European Union and the OECD are able to take any decisions.

This case, shows a lot about the straight link between taxation and international relations, reprisals are given as soon as taxes could be announced by countries. The goal is also not to put on a taxation system, but also to keep good commercial relations with all partners, and respecting all interests, at all costs.

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