Wednesday, 16 May 2018

Ceisteanna (12)

Thomas P. Broughan


12. Deputy Thomas P. Broughan asked the Minister for Finance the strategies he is developing to mitigate shocks to corporation tax revenues arising from President Macron's proposed 2019-2020 EU reforms or other factors from 2019-2020; and if he will make a statement on the matter. [21385/18]

Amharc ar fhreagra

Freagraí ó Béal (5 píosaí cainte) (Ceist ar Finance)

I know the Minister is an avid reader and follower of international affairs. Obviously, he read President Macron's book Revolution and his Sorbonne speech. What preparations, if any, is the Department making on the common consolidated corporate tax base on the impacts it will have on corporation tax and on the idea of a common finance Minister for Europe and a common debt? Are we doing anything? Perhaps this is the real elephant in the room. Are we doing anything to prepare for the possibility of these so-called reforms?

I have not read the book but I did read of the speech. I might ask the Deputy if he read either but I am sure he has. On the different issues he has referred to, President Macron, in his speech, referred to a defined corridor for corporation tax rates and increased convergence and called for a rethink on the taxation of digital companies. EU member states are currently discussing and debating various aspects of the common consolidated corporate tax base, CCCTB. By its nature, it is very complex and detailed. We are engaging constructively with the proposal but at the same time very carefully and critically analysing whether any aspect of it is in line with our long-term interests. To restate, tax remains a matter of member state competence and unanimity is required before any proposals can be agreed.

In respect of digital tax proposals, the Deputy will be aware that on 21 March the European Commission published two directives. One was temporary and one was comprehensive. There was an interesting discussion between Ministers at the informal ECOFIN in Sofia and it is clear that many countries have differing views on the merit of these proposals.  There is common ground among all member states that a sustainable, globally agreed solution is preferable to the EU acting alone.  Member states remain divided on the merit or need for interim measures.

The Commission’s current proposal, if adopted, would result in a significant shift in how corporate tax is administered and would have many unanticipated and negative consequences for EU member states and companies. Therefore, it is crucial that they are properly considered and analysed as they are hugely complex. I restate that unanimity is required before any proposals can be agreed.

There is a very serious move to bring in this equalisation levy on digital companies across the European area. Is the Minister saying that this is something he will steadfastly resist and that he expects the Taoiseach and the Government to continue to resist it? Does he see it as inevitable that digital products will be taxed in the country where the sales take place? On the CCCTB, the European directive in 2016 seemed to indicate that having common tax base rules was a very serious objective. That would have huge implications for our corporation tax on tax expenditures and the way we would frame it. Mr. Seamus Coffey, who I think is appearing before the Committee on Budgetary Oversight this afternoon, said that corporation tax is sustainable until 2020 or so but after that we are not so sure and we have had volatility in the past. Would the Minister regard these proposals emanating from the new French President, Mr. Macron, as a red flag that we need to keep a close watch on?

From a Fianna Fáil perspective, we view both the CCCTB and the digital taxation proposals as a step towards tax harmonisation across the European Union. From our perspective, this is an encroachment into an area of national competence and key national sovereignty. If necessary, the Minister needs to exercise the veto on these proposals. The Minister is doing what we would expect him to do in building alliances with other countries that would have a common view on this issue but if it comes to it and if these proposals are put, they need to be rejected and vetoed, if necessary.

I will not support any change that infringes the tax sovereignty of this country or poses any challenge to our ability to create and attract jobs here. As acknowledged by Deputy Michael McGrath, I am working with many like-minded countries on these matters. At this point, there is considerable concern in regard to both an interim measure and the development of a common consolidated corporate tax base that stretches well beyond Ireland, and this will become evident in the negotiations that are under way.