Brian Hayes MEP today (Wednesday) said that the digital tax proposal which the European Commission has just released should not be an attempt to go after a small number of US multinationals as that would not be good for inward investment to the EU or for EU/US relations. However, he said that Ireland should be more engaged and flexible on the digital tax agenda.
“The simple fact is that Ireland relies heavily on tax revenue from digital companies and we don’t have any idea what consequences there will be for such proposals.
“On the bare face of it, the Commission’s so-called ‘targeted approach’ is a clear attempt to go after large US multinational tech firms. This is not an appropriate solution to taxing the digital economy. Proposing an arbitrary measure which hits a small number of US companies is not consistent with a level playing field economy.
“A digital tax based on OECD rules is the only viable option for Europe. Anything else is just a tax on US multinational tech firms. Anything else would simply propel the protectionist agenda of both the US and the EU. The EU is right to demand fairer tax on the digital economy and right to place this issue centre stage internationally. But moving ahead of the OECD and effectively trumping OECD efforts won’t help Europe get and keep tech investments within the EU.
“Ireland must recognise that action does need to be taken on how we tax the digital economy. There is potentially a lot of revenue being accumulated through digital platforms or transactions that is going untaxed and we need to look at that.
“But this is a global issue. The EU cannot come up with a European solution to a global problem. The OECD will be coming forward with its report on taxing the digital economy in April and it is at OECD level that solutions must be found.
“Ireland needs to be much more engaged in the debate on taxing the digital economy and open to solutions, as long as the solutions come through the OECD. This is an issue that almost all Member states recognise needs action. While we stand firm on corporate tax harmonisation and CCCTB, the digital tax is something we must be more flexible about and take a leading role in bringing smaller member states to the table who are understandably are more cautious because of the size of their domestic economies and the impact of FDI for investment.”