French finance minister Bruno Le Maire has said companies registered in tax havens, or with subsidiaries in such places, cannot benefit from the billions of euros of support being provided by the government to limit the economic damage of the coronavirus pandemic.
France has abandoned its budget deficit and public debt targets since the start of the Covid-19 crisis, announcing €110bn in emergency funding in order to stave off business bankruptcies and prevent a surge in mass unemployment of the sort that has hit the US.
“It goes without saying that if a business has its tax base or subsidiaries in a tax haven — and I want to say this with a lot of force — it cannot benefit from the state’s financial help,” Mr Le Maire told Franceinfo radio on Thursday.
He also confirmed that companies that received state aid could not pay dividends or buy back their own shares. “There are rules you have to respect,” he said. “If your headquarters is in a tax haven, it’s obvious you can’t benefit from public support.”
Denmark has already made a similar announcement about tax havens and dividend payments.
Mr Le Maire did not specify which countries counted as tax havens, but his office said he was referring to the EU’s list of 12 non-co-operative jurisdictions, which includes Panama and the Cayman Islands, but not EU members such as Luxembourg, Ireland and the Netherlands, whose tax regimes some French policymakers have complained about in the past.
The charity Oxfam described Mr Le Maire’s announcement as “cosmetic” since it referred to “an almost empty list of tax havens, in which there is none from Europe”.
At the start of the coronavirus crisis, President Emmanuel Macron’s government launched a €45bn financial aid programme, but that sum was more than doubled as the gravity of the looming economic recession became clear. The spending is expected to triple the budget deficit to nearly 10 per cent of gross domestic product this year — the biggest since the second world war — and to increase public debt from 100 per cent of GDP to 115 per cent.
French assistance to businesses during the pandemic includes deferrals of tax and social security payments, and a “partial unemployment” scheme through which people retain their jobs even when not working but have most of their salaries paid with the help of state subsidies to employers.
More than 10m employees — half the private sector workforce — are currently in the scheme, and its extended rollout during the coronavirus pandemic is expected to cost at least €24bn.
Mr Le Maire said he wanted all businesses to be able to reopen when the country’s nationwide coronavirus lockdown was due to end on May 11, although bars and restaurants will remain closed.
“We want all businesses to be able to reopen on May 11,” the finance minister said, although he added that start-up dates might vary by region depending on the health situation. He declined to confirm that restaurants and bars would be allowed to reopen in mid-June.