2nd Jun 2023


The loopholes and low bar in Macron's push for a global tax

  • President Emmanuel Macron is keen to deliver some 'quick wins' early in his EU presidency, in the run up to the French presidential elections in April (Photo: France Diplomatie/Flickr)
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The new French presidency of the EU is making implementation of the recent OECD global tax deal a high priority. The 2021 deal allows for a global corporate minimum tax rate, the first time that such an agreement has been reached.

As set out in a new report by Corporate Europe Observatory and Observatoire des Multinationales, president Emmanuel Macron is keen to deliver some 'quick wins' early in his EU presidency.

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  • A recent exposé by Le Monde and Contexte revealed how a French government position paper on new EU tax transparency rules was based on a paper drafted by MEDEF's leading tax expert. MEDEF is one of France's biggest corporate lobby groups (Photo:

Showcasing positive outcomes of France's membership of the EU might help Macron in the run up to the French presidential elections in April, especially when facing the eurosceptic right wing at the polls.

However, the OECD tax deal sets the bar far too low, and is full of loopholes. It is vital that the French government does not prioritise speed over ambition, nor corporate lobby wishlists, when getting the deal over the line in the council, or it risks a hollow victory that fails to deliver tax justice.

15 percent not enough

The OECD deal will introduce a minimum tax rate of 15 percent on the profits of the biggest corporations. The deal was hailed by Macron as "historic" and a "real step forward for tax justice" and could deliver an annual boost to French public finances of up to €4bn.

But 15 percent is far too low as a minimum corporate tax rate, given that it is barely higher than the current rate in notorious tax havens like Mauritius. Macron's rhetoric does not match the reality of the deal and it will be vital that EU implementation enables member states to introduce a higher tax rate if they wish.

There are also numerous loopholes in the deal which will enable corporations to keep portions of their profits outside of the scope of the tax, so paying even less than 15 percent.

Moreover, the revenue raised from the tax will largely go to countries where multinationals are headquartered, rather than where their profits were earned.

This means that countries in the global south will barely benefit. For the poorest countries to earn more, a change in bilateral tax treaties will be required. Every member state should now agree such changes to their tax treaties with poorer countries to make the outcome fairer.

The EU Commission published its proposal for the EU implementation of the OECD deal in December; regrettably it was not more ambitious than the original, except on one important point.

In contrast to the OECD deal, the commission's proposal will apply the minimum tax to both foreign and domestic affiliates which is to be welcomed.

Now the French presidency will need to steer the file through the council to finalise it: will Macron try to improve it or will he water it down for an electoral quick win?

French industry's inside lobbying

There are reasons to be worried. A recent exposé by Le Monde and Contexte revealed how a French government position paper on new EU tax transparency rules was based on a paper drafted by MEDEF's leading tax expert. MEDEF is one of France's biggest corporate lobby groups.

The paper outlined France's 'red lines' and supported the council's corporate-friendly position on the tax transparency proposal which included several industry-friendly loopholes. It is now expected that the same government department will lead on the French presidency's approach to implementing the OECD deal.

MEDEF has a long wish-list of carve-outs and loopholes aimed at protecting corporate profits, while MEDEF's EU counterpart BusinessEurope is also active. It's clear that corporate interests will try to weaken the EU implementation.

The OECD deal is not the only tax file on the agenda of the EU council in the coming months.

The council is due to revise the EU tax haven blacklist; the revision is long overdue. The current blacklist does not include any of the world's 20 worst corporate tax havens.

Additionally EU member states, some of which are among the most harmful tax havens in the world, should be screened according to the same or higher standards than third countries, as set out in Oxfam's Manifesto on Tax for the French Presidency of the Council of the EU. But it is not clear what level of ambition Macron will bring here.

The same is true of the financial transactions tax (FTT), a tiny tax on financial transactions to dis-incentivise financial speculation and to boost tax revenue for public services.

France was an early advocate of this tax and in 2017 Macron made a strong pitch for an EU FTT. But last year he was accused of siding with industry voices when a Portuguese effort to progress the tax at the EU level failed.

It's clear that the minimum corporate tax rate will be a priority for the French presidency. But to claim a genuine success, Macron will need to ignore the industry lobbies and ensure that the new rules usher in a far more progressive corporate taxation regime which benefits not just the EU but the global south too.

And if he really cares about fairer taxation, the French presidency should also advance on ambitious reform of the tax havens list and the EU FTT.

Author bio

Vicky Cann is a researcher with Corporate Europe Observatory. Chiara Putaturo is tax policy advisor with Oxfam EU.


The views expressed in this opinion piece are the author's, not those of EUobserver.

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