G7 Countries Take a Step Towards Taxing Big Internet Companies

France, Italy, Germany, Japan, the United Kingdom, Canada and the United States (the G7 countries) reached Thursday a principle of agreement for Internet companies to pay taxes in countries where they have digital activity, although they lack physical presence, to prevent them from transferring their profits to tax havens.

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The compromise reached at the G7 finance ministers and central bank governors meeting in Chantilly, France, does not create specific taxation for virtual companies, although it aims at facing the challenges big transnational companies pose in terms of tax collection.

The measure is not yet defined and the Organization for Economic Cooperation and Development (OECD) has been commissioned to have its "architecture" ready in January so that a final decision can be made before the end of 2020.

In spite of everything, the French minister, Bruno Le Maire did not hesitate to speak of "a breakthrough" for more just and effective taxation.

He also welcomed the fact that the G7 has adopted "a coordinated, multilateral and more constructive approach", following the threats of sanctions launched this week by President Donald Trump administration against France for its attempt to create a tax for Google, Apple, Facebook and Amazon, the GAFA tax.

Le Maire reiterated Thursday that this French tax "does not attack any particular country" and that it will be withdrawn as soon as there is another one on an international scale that replaces it.

At the Chantilly meeting, the G7 ministers expressed unanimously "strong concerns" about the Libra, a cryptocurrency that Facebook seeks to put into motion. For it poses "serious" technical and political problems.

To begin with, Facebook has not presented any provisions to guarantee that Libra will comply with the rules of combating money laundering or financing of terrorism. Neither it has informed how personal data would be protected.

In a more political tone, Le Maire said that "we cannot accept that private entities start their own currencies" without assuming similar transparency obligations which are applied to sovereign issuers.

The Libra entails "systemic" risks for the international financial system, an issue that is to be analyzed by the "cryptocurrencies working group", which is led by Benoit Coeure, a member of the European Central Bank.