UK digital tax ‘problem’ for Ireland

Paschal Donohoe

By Eamon Quinn

A UK digital tax targeting tech giants such as Amazon, Google, and Apple will likely undermine efforts by Finance Minister Paschal Donohoe to marshal opposition to a similar plan from the European Commission for an EU-wide tax.

The British will be “narrowly targeting” its new “carefully designed” digital services tax from April 2020 on firms generating over £500m (€562m) a year in global revenues, UK chancellor Philip Hammond said in his budget speech.

The proposal is similar to that unveiled in March by EU tax commissioner Pierre Moscovici, for a digital tax of 3% across the EU on the turnover of online giants, designed to bring in €5bn. 

It is widely seen as potentially challenging a pillar of Ireland’s corporate tax regime.

Alan McQuaid, chief economist at Merrion, said the UK move poses “a problem” for Ireland in its fight against the commission’s tax plan.

“We have to stick to our guns. Our Government is adamant that the [tax] will not happen. Something has to give. Someone has to blink first,” said Mr McQuaid.

The commission’s proposal, which Bruno Le Maire, the French finance minister, last week urged MEPs to support, is aimed at getting more money out of US technology giants such as Google, Facebook, and Amazon.

Mr Donohoe has repeatedly said a number of EU countries, and not just Ireland, oppose its introduction. 

He wants the commission to defer until the OECD studies the matter.

In his budget speech, Mr Hammond said the UK would examine any OECD alternative proposal.

Brian Keegan, director of public policy and taxation at Chartered Accountants Ireland, said that the UK move was not totally unexpected.

Under the commission’s plan, companies with significant digital revenues in Europe will pay a 3% tax on their turnover on various online services in the EU, bringing in an estimated €5bn.

Mr Moscovici has, in the past, dismissed accusations he was going after rich US tech companies at a time of huge trade tensions with the Trump administration.

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