The Deputy will be aware that on 21 March 2018 the European Commission published two proposed Directives which seek to tax certain digital activities differently within the EU.
The first, an ‘interim’ solution for a 3% levy on turnover from certain digital service activities. The second, ‘comprehensive solution’ requires an overhaul of international taxation, establishing the concept of a “digital permanent establishment”, allowing countries taxing rights over the digital business carried out by a company in that country, even where that company has no physical presence there.
The interim proposal is being debated among Member States – both at technical and political level. Most recently, it was discussed at the informal ECOFIN on 8 September 2018. I welcomed the opportunity to discuss the proposal with my EU counterparts and there was a healthy debate. While it is clear that there is widespread preference for a global solution, Ministers remain divided on the need for interim EU measures. Technical discussions on the proposal are also ongoing.
I expect that digital tax will be discussed again at the next Ecofin meeting in November and, given my concerns in relation to these proposals, I will be discussing the issue with my counterparts in other Member States over the coming weeks in advance of, and at, the Ecofin discussions.
Ireland continues to actively engage on this matter with our fellow Member States and at OECD level to meet the challenges and opportunities that arise from the digitisation of the economy.