Tech giants pay tax ‘nowhere’ and the world needs to find a solution: German finance minister

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ERIC PIERMONT | AFP | Getty Images
German Finance Minister and Vice-Chancellor Olaf Scholz addresses the second day of French employers’ association Medef’s summer meeting in Jouy-en-Josas on August 29, 2018. 

Technology firms aren’t paying their fair share in taxes and it’s time to find a global approach to the problem, German Finance Minister Olaf Scholz told CNBC.

One of the biggest points of contention has been over the claim that much activity of tech firms — for instance, in online advertising — is not actually being taxed.

France has led the pack in the European Union, introducing a 3% levy on the revenues of tech companies that earn more than 750 million euros ($843 million) worldwide each year. The move has attracted the ire of the U.S., which is worried the measure could hurt American firms.

The U.K., meanwhile, has proposed a 2% digital services tax on tech firms that make at least 500 million pounds ($653 million) a year in global revenue.

There has been some disagreement among EU member states over how to implement a Europe-wide digital tax. EU Competition Commissioner Margrethe Vestager recently said Europe should “take the lead” on such a proposal if there is insufficient global consensus.

For his part, Scholz said finding agreement on tax reforms to match the digital age remained a “global” problem.

“I think we should find a global agreement on that question, this would help a lot,” Scholz said. He further noted that a “common approach” was being taken in the U.S., likely referring to American efforts to apply a minimum tax rate on multinational companies that operate in low-tax jurisdictions.

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