Donohoe to face down EU leaders on tech tax

PASCHAL DONOHOE is set for a showdown with his French counterpart and the European Commission over Ireland’s stance on taxing tech giants including Google and Facebook.

Estonia, which holds the rotating EU presidency, is proposing an overall reform of corporate taxation that would tax internet companies in each EU state where they make profits, regardless of their tax residence.

Other European leaders, including French President Emmanuel Macron, want to tax digital firms based on their turnover under radical plans to be discussed by EU finance ministers in a meeting in Estonian capital Tallinn, on Saturday.

Any changes need backing from all member states, and Mr Donohoe indicated he will resist moves that would hit some of Ireland’s biggest employers – and favours shifting the debate from EU to global level. The Finance Minister (below) said any move to change the tax goalpost should be made at OECD level.

“We believe that the appropriate mechanic for change in relation to international taxation is the work that the OECD have done,” he said.

“The points that I will be making at this meeting publicly is that corporation tax and the rates are absolutely a decision for a country to take, particularly a small country in terms of how we strengthen our economic model and create employment and investment in Ireland,” he said.

He was speaking at the launch yesterday of a review of Ireland’s corporation tax code, prepared for Government by economist Seamus Coffey.

The Coffey report was commissioned to quell unease among some non-Fine Gael cabinet ministers, especially Children’s Minister Katherine Zappone, at the decision last year to fight the EU ruling that Ireland should collect €13bn in back taxes from Apple.

The technical paper didn’t look at the 12.5pc corporation tax rate or at Apple specifically.

The findings were largely favourable to the current regime, but set out options for tax reform that will now be thrown open for consultation.

Ms Zappone welcomed the report, saying it had “many worthwhile recommendations, including enhanced resources for Revenue to prevent future international disputes”.

“The recommendation for a Detailed Consultation is particularly welcome. I will remain in close contact with my colleague Minister Donohoe in advance of budget day to ensure that the consultation will be inclusive of all voices – including those who seek and campaign for tax justice,” she said.