Dáil Éireann Debate, Wednesday - 13 July 2022
159. Deputy Ged Nash asked the Minister for Finance the expected yield from introducing a digital services tax on the same basis as France, Italy and Spain with a 3% tax rate in which a digital interface is provided and advertising services are based on user’s data with a €750 million global revenue threshold and a domestic revenue threshold of €25 million and €5 million; and if he will make a statement on the matter. [38664/22]
View answerAlthough the Digital Services Taxes which were introduced in France, Italy, and Spain were not precisely the same as each other, all three shared substantial overlaps with the Digital Services Tax proposed by the European Commission in 2018.
When making its proposal, the Commission estimated that an EU-wide Digital Services Tax could yield €5 billion per annum, to be shared between all EU Member States, based on levels of activity in Member States.
It would be reasonable to assume that Ireland’s share of that estimated yield could be calculated in proportion to the population of Ireland as a share of the population of the EU overall. Around the time of the proposal, Eurostat estimated the population of Ireland to be approximately 0.9% of the total population of the EU.
Applying this to the Commission’s overall estimated yield would mean that Ireland could collect approximately €45 million from introducing a Digital Services Tax of the type mentioned.
The net yield would be reduced to the extent that deductions from company profits for Digital Services Tax paid would reduce corporation tax receipts.
The European Commission’s proposal was based on (1) a €750 million global revenue threshold and (2) an EU-wide €50 million revenue from in-scope services threshold. Based on available data, it is not possible to estimate the potential yield of a Digital Services Tax with different thresholds.
It should be noted that Pillar One of the two-pillared solution to address the tax challenges brought about by the digitalisation of the economy, agreed last October by the OECD/G20 Inclusive Framework on BEPS, provides for the standstill and removal of Unilateral Measures such as Digital Services Taxes.
I firmly believe that Pillar’s One and Two of the agreement will be successfully implemented, in a manner which is faithful to the agreement. I am devoting considerable resources to this process. My officials, along with officials from the Revenue Commissioners, are engaged in intensive discussions with their counterparts from around the world at OECD working parties to ensure that Ireland's interests are protected.
It should also be noted that in a joint statement published last October, the U.S. Treasury and its counterparts in Austria, France, Italy, Spain, and the United Kingdom announced an agreement for the unwinding of Digital Services Taxes in return for the US dropping planned retaliatory trade sanctions on these countries.
It is important that any proposal avoids raising trade tensions and does not undermine the ongoing implementation of the OECD agreement. Implementation of the agreement will bring much needed stability to the international tax framework after the turbulence and uncertainty of the last couple of years. Throughout this process, I have remained convinced that a global approach under Pillar One of the OECD agreement is preferable to unilateral measures like a Digital Services Tax.
