French finance minister Bruno Le Maire has reiterated a goal for the EU to have a digital tax on technology giants such Amazon, Facebook and Apple, within two years, as a meeting of finance ministers agreed for the commission to present proposals in the spring.
Plans for a digital tax are opposed by the Government because its adoption is widely seen as potentially undermining the Irish corporate tax regime and weakening the attraction for multinationals to base operations here. At the meeting in Brussels, EU ministers adopted a common position on taxation on companies which have been accused of paying too little tax in the EU. Such firms reroute the booking of profits to low-tax countries where they have headquarters, such as Luxembourg and Ireland.
The common text, watered down after pressure from some countries, calls for considering a new corporate taxation system based on the ‘virtual’ presence of a firm in a country. The system would allow for the taxation of online business where the companies have activities and not only where they are headquartered. The commission is expected to present proposals in the coming months, which could include “temporary measures” like targeted taxes on transactions carried out by digital firms. Temporary levies could be adopted before a global deal on taxing the digital economy. The EU would prefer tax reforms were co-ordinated with international partners.
The ministers also agreed on new rules forcing online shopping firms such as Amazon, Google, Alibaba to collect the Vat on sales on their platforms, to counter possible tax fraud by firms using such platforms.
“Ireland remains committed to global tax reform and believes that global solutions are needed to ensure tax is paid by companies where value is created,” said the Department of Finance, saying the Government continued to support the drive by the Organisation for Economic Co-ordination and Development to reform the global system of corporate taxation.
“We believe any reforms in this area must ultimately be globally agreed,” it said.
The EU also agreed on a tax blacklist of 17 countries as it seeks to further step up its fight against opaque practices that facilitate avoidance by multinationals and individuals. The group of jurisdictions, which was rubber-stamped by the finance ministers, includes South Korea, Panama, Bahrain and the UAE, as well as Barbados, Samoa, Grenada, Macau, the Marshall Islands, Palau, and St Lucia. Ministers also decided another 47 will be included in a gray list.
Irish Examiner, Reuters and Bloomberg