By Michelle Martin and Eamon Quinn
German Finance Minister Olaf Scholz has said he favours getting a binding deal on a EU digital tax at a meeting of EU finance ministers next month, further undermining Irish opposition to the plan.
“If the negotiations continue the way they have been going, we’ll still be in talks in 100 years. That is why I support the French model and want to offer the proceeds to the EU,” Scholz said yesterday.
There has been discord among EU member states over a proposed EU plan to tax big internet firms such as Google and Facebook on their turnover.
Germany called this month for a revision of the plan that would exclude from the proposed tax activities linked to carmakers. French Finance Minister Bruno Le Maire, a strong proponent of the new tax, said yesterday that an agreement was close to being struck.
Under a proposal from the European Commission in March, EU states would charge a 3% levy on the digital revenues of large firms that are accused of averting tax by routing their profits to the EU’s low-tax states, like Ireland’s.
The plan is aimed at changing tax rules that have let some of the world’s biggest companies pay unusually low rates of corporate tax on their earnings.
But it requires the support of all 28 EU states and is opposed by a number of them, including small countries like Ireland that have benefited by allowing multinationals to book profits there on digital sales to customers elsewhere.
The Government has vehemently resisted targeting tech giants such as Amazon, Google, and Apple because it could be the start of the end of one of the central pillars of the country’s low tax regime.
But the timing of the decision by the UK made late last month to bring in a similar tax undermined efforts by Finance Minister Paschal Donohoe to rally opposition from across the EU to the commission’s tax.
The British plan for its tax would bring in a relatively small amount from April 2020 on giant online firms making over £500m (€562m) a year in global revenues.
The EU plan which also targets online giants is designed to bring in €5bn a year, a relatively small amount of tax in the context of the EU’s budget of over €160bn.
Mr Scholz also said the EU should push ahead with minimum corporate tax rates and effective taxation of digital companies from January 2021 if states fail to reach an international agreement on tax avoidance.
“We are in principle in agreement with our French friends on such a two-step strategy,” he said.
Reuters and Irish Examiner