EU 2% digital tax ‘threat to Ireland’

By Eamon Quinn

A prediction by the French finance minister that the EU plan to tax revenues of tech companies in Europe will be set at a rate “closer to 2% than 6%” will boost the chances of the proposal being adopted in the face of Irish opposition, a leading Irish tax expert has said.

Joe Tynan, head of tax at PwC Ireland, said the digital tax proposals remain “a significant threat to Ireland’s corporation tax” regime because so many tech companies such as Google, Twitter, Facebook, Airbnb, and Uber have large offices in Ireland. Already widely leaked, the Commission’s tax paper is due to be published in about two weeks’ time but the details of the precise level of the tax, which will be levied on big digital companies’ gross turnover, has yet to be decided.

Setting the tax at a low level of 2% would help it be implemented, but would also likely mean increases in the future, and potentially further undermine Ireland’s corporation tax base, Mr Tynan told the Irish Examiner.

And now that the US Treasury will tax the trillions of dollars US tech giants have kept off-shore, the Commission risks stoking retaliatory action from Donald Trump’s White House, Mr Tynan said.

Raising €8bn in corporation tax revenues last year, the Government has strongly opposed the digital tax which it argues undermines the sovereign principle of countries setting tax policy. Ireland’s tax regime has long been under international scrutiny and led to a Commission ruling that Ireland had struck a sweetheart tax deal and should collect €13bn in back taxes from Apple. French finance minister Bruno Le Maire told Le Journal du Dimanche the EU later this month will unveil plans to tax large global tech companies’ revenue at a rate in the 2%-to-6% range, though more likely closer to 2% than to 6%, Reuters reported.

“A European directive will be disclosed in the coming weeks. It will be a considerable step. The (tax rate) range is 2% to 6%, we will be closer to 2% than 6%,” Mr Le Maire said. To those who might say the measure is too modest, Mr Le Maire said: “It’s a starting point. I prefer a text that will be implemented very quickly rather than endless negotiations. We will fine tune it later.”

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