Thursday, 22 November 2018

Questions (32)

Joan Burton


32. Deputy Joan Burton asked the Minister for Finance his plans in respect of digital taxation; and if he will make a statement on the matter. [48585/18]

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Written answers (Question to Finance)

The Deputy will be aware that the Commission proposal for an interim Digital Services Tax, which imposes a 3% levy on the turnover of certain companies’ digital activities, is currently being debated among Member States – both at a technical and political level.

Ireland has a significant number of concerns with the Commission’s interim tax proposals. These concerns include the short term nature of the approach, the proposed move away from taxing profits to taxing revenues, the lack of a clear link between any new interim tax and evidence of value creation by digital business and the potential impact on international trading relations from the adoption of a unilateral EU initiative on digital tax.

While Ireland is among a number of Member States which object to the fundamental nature of the proposal, we are joined by a wider group which share our concerns on a series of technical issues yet to be resolved. Unanimity is required among Member States before the proposal could be agreed.

I recently reiterated Ireland's opposition to the proposal at ECOFIN on 6 November where I highlighted particular concerns I have regarding the negative consequences for Europe as a predominantly exporting bloc from creating a precedent of taxation at point of consumption rather than where value is created.

The Deputy will also recall that we discussed this proposal when I attended the Oireachtas Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach as part of Committee Stage of the Finance Bill 2018. During that debate, I acknowledged that the taxing landscape for digital companies is going to change. However, it is my strong view that if the EU were to unilaterally introduce a digital tax, it would undermine the international tax reform process and risks disrupting international trading relations.

Ireland has been a committed participant in, and strong supporter of, tax reform efforts led by the OECD through the BEPS process. I believe the OECD offers the safest and most effective way for delivering a sustainable solution to the challenges arising from the digitisation of the economy. Intensive work is underway at the OECD and it is expected that the next significant update will be published in June 2019.

Ireland will continue to actively engage with work in the area of the digital economy at both OECD and EU level.