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France and Germany seek to plug tax loopholes exploited by Apple, other tech firms

France is working with Germany on European Union reforms aimed at plugging loopholes U.S. technology companies like Apple use to minimize taxes, tactics that give foreign entities a leg up on local competition.




French Finance Minister Bruno LeMaire on Friday announced the plans last week, saying France will propose "simpler rules" for a "real taxation" on tech firms, reports Bloomberg.

"Europe must learn to defend its economic interest much more firmly — China does it, the U.S. does it," Le Maire said. "You cannot take the benefit of doing business in France or in Europe without paying the taxes that other companies —French or European companies —are paying."

France and Germany already discussed tax issues and potential solutions at a joint cabinet meeting last month, the report said. German finance ministry spokesman Denis Kolberg on Monday said the two countries will investigate specific proposals after Germanys national election on Sept. 24.

French President Emmanuel Macron's government is spearheading the initiative, which looks to close loopholes in the European tax system that currently work in favor of foreign companies like Amazon, Apple, Facebook, Google and other foreign tech firms. Macron is calling on 19 European countries to follow suit as he seeks to keep campaign promises of reducing domestic corporate tax rates by 25 percent.

Tech companies, through complex financial maneuvering, are able to reduce or completely skip out on hefty corporate taxes by shifting revenue across borders to states with favorable rates. Apple, for example, employs a "Double Irish with a Dutch Sandwich" scheme that funnels overseas profits through the Netherlands, as well as other ports, and into Ireland, where the company is not considered a tax resident. The scheme allowed Apple to pay extremely low tax rates, at some points down to 0.005 percent.

A recent European Commission investigation into Apple's tax practices found rates on the company's European profits illegally low, a determination that resulted in a $15.2 billion bill. Ireland, which has stood by Apple throughout the EU process, was subsequently accused of granting illegal tax benefits to the company and is being forced to recoup the funds. Both Apple and Ireland are appealing the ruling.