Thursday, December 29, 2016

Budget : the constitutional Council censures the “Google tax” – The Echoes

The constitutional Council has censured Thursday, the article introducing a “Google tax” in the finance bill 2017, which was aimed at strengthening the taxation of profits diverted by multinationals on their activity performed in France. The Wise men have rejected this provision on the ground that the tax administration may not have “the power to choose the taxpayers who should or should not fall within the scope of application of the tax on companies,” according to a press release.

The mp PS Yann Galut had proposed such a device is against the opinion of the government based on the models of british and australian. Its aim is to counter price of transfers between subsidiaries devoid of economic substance, or timelines by which foreign companies avoid to declare a permanent establishment in France (examples of Amazon and the warehouses, platforms of relationship between electronic products or services such as Airbnb, Uber, etc).

In the event of breach demonstrated, the companies would be penalized by a rate five points higher than the rate of corporation tax in force, and in order to rebalanced the taxation on these companies.

The minister of Economy and Finance estimated in early November that this device “is not a good solution”. According to him, it would be “extremely favourable to the undertakings concerned”, since it is similar to the “a way somehow to push the burden of work to calculate what is the actual profit made by the companies in a country, and from there the amount of taxes”.

The collection at the source is not censored, but…

with respect to the withholding at the source, a leading measure of the budget in 2017, the constitutional Council has rejected the complaints of the parliamentarians without giving his rein to this flagship measure of the budget 2017. the Wise have pronounced that on four main points raised by the parliamentarians, and they have not been censored, which does not therefore prevent its implementation for the time being.

In detail, they have held that the provisions of the article were not “unintelligible”, as argued by the parliamentarians. They were also of the view that “given the open option to taxpayers allowing them to choose a rate +default+ who do not reveal to their employer the tax rate of the home, the legislature (had) not infringe the right to respect for private life”.

in addition, “specific measures are provided, in the case of business leaders, to avoid that they can make trade-offs designed to take advantage of the year of transition.” Finally, the Commission considers that the companies will only play a “collection role”, collection will continue to be insured by the State, and they will, therefore, not to be indemnified in this respect.


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