France is working with Germany and other partners to plugloopholes that have allowed U.S. tech giants like Alphabet Inc.'sGoogle, Apple Inc., Facebook Inc. and Amazon.com Inc. to minimizetaxes and grab market share in Europe at the expense of thecontinent's own companies.

France will propose the “simpler rules” for a “real taxation” oftech firms at a meeting of European Union officials duemid-September in Tallinn, Estonia, French Finance Minister Bruno LeMaire said in an interview in his Paris office on Friday,complaining that Europe-wide initiatives are proving too slow.

“Europe must learn to defend its economic interest much morefirmly—China does it, the U.S. does it,” Le Maire said. “You cannottake the benefit of doing business in France or in Europe withoutpaying the taxes that other companies—French or Europeancompanies—are paying.”

The push reflects mounting frustration among some governments,regulators and, indeed, voters, at the way international firmssidestep taxes by shifting profits and costs to wherever they aretaxed most advantageously—exploiting loopholes or special dealsgranted by friendly states.

The European Commission last year ordered Apple to pay as muchas 13 billion euros ($15.3 billion) plus interest in back taxes,saying Dublin illegally slashed the iPhone maker's obligations towoo the company to Ireland. Apple and the Irish government arefighting the decision.

The clampdown on tech firms is part of President EmmanuelMacron's muscular approach to ensuring a level playing field, afterseeing first hand during his election campaign how French firmsstruggle to compete with countries where taxes and social securitypayments are lower.

To that effect, Macron is renewing a broader call for the 19euro-area states to better align their tax systems. Le Maire saidthat Macron's pledge to lower corporate taxes to 25% by the end ofhis five-year term should be seen as an opening gambit in thisprocess. He urged countries with lower tax rates to raise them.

France is making “a considerable effort,” Le Maire said. “We'reasking other member states of the euro zone to make a similareffort in the other direction.”

Again, the country's historic alliance with Germany is at theheart of Le Maire's plan to bring around other EU countries. Hesaid once the euro area's two biggest economies are aligned, thatwould be the basis for a wider convergence.

“No later than 2018 we should be able to have a common corporatetax with Germany which should be the basis for a harmonization atthe level of the 19 member states of the euro zone,” he said.Germany's corporate tax rate is currently between 30% and 33%,according to Deloitte.

No Protectionism

Macron is also cutting taxes on financial wealth, dividends andcapital gains, while simplifying labor rules as he tries to makethe country more attractive for investors. The government will alsoreform the pension system and unemployment benefits, and will seekto boost housing construction to reduce real estate prices, theminister said.

Le Maire rejected the idea that his government's intervention incorporate decisions amounted to protectionism, saying Macron onlydecided to block Italian shipbuilder Fincantieri SpA's bid forFrench shipyard STX last month because it was of strategicimportance to France.

Talks with Fincantieri are continuing and France aims to find asolution by the end of next month, Le Maire reiterated. He said hehopes for closer cooperation between French and Italian militaryshipbuilders and, ultimately, the creation of a “large Europeannaval group” based on a Franco-Italian alliance.

Bloomberg News

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