France said Wednesday it would make sure that internet commerce giant Amazon is subject to a minimum global tax endorsed by the Group of Seven wealthy nations, while calling for a rapid conclusion of the tax negotiations.
According to the plan, countries would be allowed to tax a share of the profits of the most profitable companies in the world at a rate of at least 15 percent, regardless of where they are based.
This would apply, however, only to companies whose profit margins exceed 10 percent.
Despite Amazon's colossal footprint and a market capitalisation of more than $1 trillion, its profit margin last year amounted to just 6.3 percent.
But French Finance Minister Bruno Le Maire told the broadcaster RMC that the potential loophole would not stand.
The tax reform "must apply to Amazon," he said. "France will fight to make sure that it does."
He said the tax reform had been negotiated at the Organisation for Economic Co-operation and Development (OECD) with the specific aim of making all digital giants pay their fair share.
"The problem with Amazon is that some of its businesses don't generate a profit margin of more than 10 percent," Le Maire said, singling out its deliveries branch.
At Amazon's cloud-based services, meanwhile, where demand has surged for its remote computing, analytics and software development offerings, margins are "very large", he said.
The answer, he said, is to treat Amazon's businesses separately for tax purposes "so that all the very profitable parts are certain to be subject to this digital taxation."
Le Maire acknowledged there were several obstacles still to overcome before the world could apply the digital tax regime.
One was that China's agreement was needed. "Believe me, that's going to be a very different ballgame," Le Maire said.
Another was the hope of some European countries to go beyond the 15 percent tax rate, which Le Maire said constituted only a "minimum rate."
The final challenge was to make sure that "all digital giants are subject to this tax without exception."
- 'Not acceptable' -
President Emmanuel Macron meanwhile called for "a rapid and ambitious conclusion of negotiations" to finalise a tax deal.
"This negotiation is crucial," he said ahead of a meeting Wednesday with the OECD's new boss, former Australian finance minister Mathias Cormann.
"At a time when we are facing a pandemic and an unprecedented economic crisis, it is not acceptable that multinational companies are taxed too little, taxed badly or not taxed where there should be," he said.
The OECD now has to work with more 130 countries to make progress ahead of a G20 meeting in Italy in July, he said.
Projected revenues from the tax would add at least 50 billion euros ($61 billion) to government coffers across the European Union every year, Macron said.
The French leader is to hold a press conference Thursday on this week's G7 summit in Britain as well as on a NATO meeting in Brussels on Monday.
The tax initiative is on the agenda of Macron's planned meeting on Friday with US President Joe Biden, his office said.