France urges ‘wake-up call’ on tax for US web giants Google, Amazon and Facebook

The tax would mainly affect US companies with worldwide annual turnover above €750 million. (AFP)
Updated 06 September 2018
0

France urges ‘wake-up call’ on tax for US web giants Google, Amazon and Facebook

  • The tax, which Paris hopes to implement early next year, targets multinationals which declare their revenues from across the 28-member EU in a single low-tax jurisdiction
PARIS: French Finance Minister Bruno Le Maire called Thursday for EU leaders to heed a “wake-up call” on a plan to tax US technology giants, amid signs of growing resistance to the French-led initiative.
“I urge my European counterparts to hear the wake-up call; that they listen to what European citizens want,” Le Maire told France 2 television.
The tax, which Paris hopes to implement early next year, targets multinationals which declare their revenues from across the 28-member European Union in a single low-tax jurisdiction, depriving other countries of billions of euros in fiscal revenue.
It would mainly affect US companies with worldwide annual turnover above €750 million ($870 million), such as Facebook, Google, Twitter, Airbnb and Uber.
“European citizens want justice, they want fiscal justice,” Le Maire said.
“They don’t understand why we allow companies like Google, Amazon and Facebook pay 14 percentage points less in tax than small and midsize businesses, or a European company,” he said.
The tax is expected to be high on the agenda as EU and eurozone finance ministers meet in Vienna this weekend.
But France’s proposal, which would require backing by all EU members, appears to be running into resistance.
Germany’s Bild newspaper reported Wednesday that Finance Minister Olaf Scholz, who had given his backing to the plan, now believes that “demonization” of tech giants was “not efficient.”
Bild cited an internal ministry note which said that “publicly declaring that companies like Google, Apple, Facebook and Amazon should pay taxes on their revenues is not defendable.”
Yet in a press interview Thursday, Scholz denied reversing his stance, while indicating he was considering alternatives.
“There are several proposals, which all have their advantages and disadvantages,” he told the Augsburger Allgemeine.
“But it isn’t the kind of solution that just comes to you while in the shower one morning,” he said.
Asked about Berlin’s stance, Le Maire played down the reported divergences.
“The Germans have been at our side since the beginning to start taxing digital giants. I’m convinced they will support us all the way,” he said.


Debut of China’s Nasdaq-style board adds $44bn in market cap

Updated 22 July 2019
0

Debut of China’s Nasdaq-style board adds $44bn in market cap

  • Activity draws attention away from main board

BEIJING: Trading on China’s new Nasdaq-style board for homegrown tech firms hit fever pitch on Monday, with shares up as much as 520 percent in a wild debut that more than doubled the exchange’s combined market capitalization and beat veteran investors’ expectations.

Sixteen of the first batch of 25 companies — ranging from chip-makers to health care firms — increased their already frothy initial public offering (IPO) prices by 136 percent on the STAR Market, operated by the Shanghai Stock Exchange.

The raucous first day of trade tripped the exchange’s circuit breakers that are designed to calm frenzied activity. The weakest performer leapt 84.22 percent. In total, the day saw the creation of around 305 billion yuan ($44.3 billion) in new market capitalization on top of an initial market cap of around 225 billion yuan, according to Reuters’ calculations.

“The price gains are crazier than we expected,” said Stephen Huang, vice president of Shanghai See Truth Investment Management. “These are good companies, but valuations are too high. Buying them now makes no sense.”

Modelled after Nasdaq, and complete with a US-style IPO system, STAR may be China’s boldest attempt at capital market reforms yet. It is also seen driven by Beijing’s ambition to become technologically self-reliant as a prolonged trade war with Washington catches Chinese tech firms in the crossfire.

Trading in Anji Microelectronics Technology (Shanghai) Co. Ltd., a semiconductor firm, was briefly halted twice as the company’s shares hit two circuit breakers — first after rising 30 percent, then after climbing 60 percent from the market open.

HIGHLIGHTS

• 16 of 25 STAR Market firms more than double from IPO price.

• Weakest performer gains 84 percent, average gain of 140 percent.

• STAR may be China’s boldest attempt at capital market reforms yet.

The mechanisms did little to keep Anji shares in check as they soared as much as 520 percent from their IPO price in the morning session. Anji shares ended the day up 400.2 percent from their IPO price, the day’s biggest gain, giving the company a valuation of nearly 242 times 2018 earnings.

Suzhou Harmontronics Automation Technology Co. Ltd., in contrast, triggered its circuit breaker in the opposite direction, falling 30 percent from the market open in early trade before rebounding. But by the market close, the company’s shares were still 94.61 percent higher than their IPO price.

Wild share price swings, partly the result of loose trading rules, had been widely expected. IPOs had been oversubscribed by an average of about 1,700 times among retail investors.

The STAR Market sets no limits on share prices during the first five days of a company’s trading. That compares with a cap of 44 percent on debut on other boards in China.

In subsequent trading sessions, stocks on the new tech board will be allowed to rise or fall a maximum 20 percent in a day, double the 10 percent daily limit on other boards.

Regulators last week cautioned individual investors against “blindly” buying STAR Market stocks, but said big fluctuations were normal.

Looser trading rules were aimed at “giving market players adequate freedom in the game, accelerating the formation of equilibrium prices, and boosting price-setting efficiency,” the Shanghai Stock Exchange (SSE) said in a statement on Friday.

The SSE added that it was normal to see big swings in newly listed tech shares, as such companies typically have uncertain prospects, and are difficult to evaluate.