Paris: We cannot accept big private companies issuing their own currencies without democratic control, France’s Finance Minister Bruno Le Maire stated as he indicated soon subjecting restrictions on the cryptocurrencies or digital currencies being launched by the Big Tech. At the G7 Finance Ministers and central bank governors meeting recently held in France, the group concurred on the proposed Digital Tax over digital multinationals.
The subjects presented at the G7 meeting, herald the possible conflict about to spark between the Big Tech or cryptocurrency companies and the leading economies of the world.
Last month, the social media giant ‘Facebook’, which has over 2 billion users worldwide, announced that it was set to launch the cryptocurrency ‘Libra’. The digital currency, backed by real-world bank deposits and government securities, would be launched in mid-2020, Facebook claimed. At the same time, Facebook underscored that Libra would be used by the billions of people throughout the world with no bank accounts. The social giant’s claim caused a stir among the leading economies of the world, along with the US.
US President Donald Trump sharply criticised the move. He stated that he was not a fan of Bitcoin and other cryptocurrencies, and that unregulated crypto assets could facilitate unlawful behaviour, including drug trade as also other illegal activity. Simultaneously, he asserted that Facebook Libra’s “virtual currency” would have little standing or dependability. Right after, the US Treasury Secretary referred to the concerns surrounding the cryptocurrencies, a ‘national security issue’ and has asserted they would be initiating efforts to keep it under control.
On the other hand, France has decided to levy a tax on the high revenues generated by the Big Tech companies. Accordingly, a 3% tax would apply to the tech companies that have yearly global sales of 750 million euros ($844 million) and a revenue of more than 25 million euros in France. Additionally, the new tax would be applied retrospectively from the start of the year. On the sidelines of the developments so far, the G7 meeting in France is noteworthy.
Since the G7 revolving presidency is currently with France, the issue on the Digital Tax was already anticipated to take centre stage. On the contrary, by repeatedly presenting the issues concerning Libra over the past few days, Japan indicated the matter would be deliberated upon at the G7 meeting. Nevertheless, the unanimity of the G7 nations over the issues is remarkable.
The G7 was in agreement over the tech companies such as Google, Facebook, Amazon, Apple and the like to be levied a minimal tax by the countries from which they generated revenues. Also, they expressed their consent on determining a minimum level of tax whereby the nations would be discouraged to compete against one another to attract the digital multinationals. During the discussions, the US tax rule called the Global Intangible Low-Taxed Income (GILTI) found a mention, and the new Digital Tax shows signs of being structured on the same grounds.
The appeals made at the G7 meeting on imposing restrictions over Facebook Libra, and other cryptocurrencies have drawn significant attention. Currently, many cryptocurrencies, along with the popular Bitcoin, are operational. However, alongside the tech industry, the digital currencies were found to be increasingly used by members of the crime industry. Thereby the US and the European countries are preparing to impose restrictions over it, and the indications at the G7 may prove to be a critical milestone towards it.