G7 seek to rein in tech giants at meeting

The G7 will grapple with taxing online tech giants such as Facebook.
The G7 will grapple with taxing online tech giants such as Facebook.

G7 finance ministers will have the powers of big digital firms in their sights when they meet outside Paris, despite divisions about how to tax them.

France wants to use its presidency of the two-day meeting from Wednesday in the chateau town of Chantilly, north of Paris, to get broad support for ensuring minimum corporate taxation.

G7 governments are concerned decades-old international tax rules have been pushed to the limit by the emergence of Facebook and Apple, which book profits in low-tax countries regardless of the source of the underlying income.

The issue has become more vexed than ever in recent days as Paris defied US President Donald Trump by passing a tax on big digital firms' revenues in France despite a threat to launch a probe that could lead to trade tariffs.

"France is a sovereign nation and will continue of course to decide as a sovereign nation on all taxation issues," French Finance Minister Bruno Le Maire said at a conference at the French central bank.

"So let's work during the G7 ... on that key question of digital taxation."

Bilateral dispute aside, France and the US are in favour of rules ensuring minimum taxation as part of an effort to overhaul international tax rules.

Although a G7 agreement would set the tone for the broader push, an agreement among all of the G7 ministers on a minimum rate or range of rates is likely to prove elusive, as Britain and Canada have reservations.

Common ground should be found more easily among ministers and central bankers present at the meeting on the issue of digital currencies and coins.

Facebook's recent announcement of plans to launch a digital coin has prompted calls from regulators to ensure it respects anti-money-laundering rules and the security of transactions and user data.

There are also deeper concerns the growing powers of big tech companies increasingly encroach on areas belonging to governments, like currency.

"These digital giants are turning into private states - states over which citizens have no control and where democracy has no place," Le Maire said.

"We cannot let companies, which are serving private interests, gather all the attributes of sovereign states. We must act."

Off the official agenda, ministers are also due to consult on possible successors to replace Christine Lagarde at the head of the International Monetary Fund.

Australian Associated Press