Concern for Ireland over UK digital tax
Plan to target tech giants should be resisted, says FF
BRITAIN has announced plans to introduce a new digital tax targeted at web giants who have traditionally paid very little there – a move which, it is feared, will have detrimental repercussions for Ireland.
In yesterday’s UK budget announcement, chancellor of the exchequer Philip Hammond pledged to force internet giants to pay their ‘fair share’ as he launched a £400million-a-year tax raid.
The new ‘Digital Services Tax’ will come into force within 18 months, and Fianna Fáil finance spokesman Michael McGrath believes it will ‘undoubtedly’ have a negative effect on our finances.
‘There are already moves afoot at EU level to introduce some form of digital taxation on the very large tech companies, and Ireland has rightly been resisting those changes,’ he said.
‘The UK remains part of the EU ‘Freedom’: Michael McGrath and depending on the outcome of the negotiations and the transition period, their ability to step out of the EU on certain tax measures is unclear. But certainly what this does highlight is the freedom that a post-Brexit UK will have to change the way they tax companies and it could undoubtedly have a negative effect on Ireland.’
He said this may present ‘serious challenges for Ireland’.
However, Bradley Adams, a corporate lawyer with Chadwick Lawrence Solicitors in the UK, made the point that the Irish Government may counteract this by attempting to make its tax system more attractive – perhaps with a version of the ‘double Irish’ loophole which US tax companies had used for so long.
‘Let’s see whether we see a new double Irish with a Dutch sandwich in response!?’ he tweeted.
Thought to be the world’s first, the new British tax will hit tech firms such as Amazon, Facebook and Google, which have long been criticised for paying tiny amounts of tax in the UK.
Mr Hammond had threatened before to push ahead with a digital tax, but had been waiting for global co-operation on the issue.
Yesterday, he said progress was ‘painfully slow’, and that ‘we cannot simply talk forever’. He told the Commons: ‘It is only right that these global giants, with profitable businesses in the UK, pay their fair share towards supporting our public services.’
He said the ‘rules of the game’ needed to evolve to keep up with the digital economy and that it was ‘not sustainable or fair’ that tech firms could generate huge revenues ‘without paying tax here in respect of that business’.
The tax will only be paid by ‘established tech giants’ – firms which generate at least £500million a year in global revenues.
Finance expert Brendan Burgess, of the Irish finance website askaboutmoney.com, said of the move: ‘It would affect us hugely but it’s the right thing to do.
‘We should not be using an artificial system in Ireland where we hollow out the tax take of other countries. I believe these large firms should pay tax somewhere, that’s the first principle, and the idea that they use Ireland to pay tax because it’s a low rate, we should not be part of that.’
‘Will there be a new double Irish?’