Why is Ire­land against the EU dig­i­tal sales tax?

The Irish Times - Weekend Review - - NEWS REVIEW - KEVIN COURT­NEY

It seems like a sen­si­ble move from the Eu­ro­pean Union: in­tro­duce a dig­i­tal sales tax, and force the big in­ter­net play­ers to pay their fair share of tax on the enor­mous prof­its made from on­line ad­ver­tis­ing and the sale of user data. Surely ev­ery EU state would im­me­di­ately sign up to this tax, and help put man­ners on those greedy in­ter­net gi­ants?

Un­for­tu­nately, that’s not the re­ac­tion the EU got when it pro­posed a 3 per cent levy on dig­i­tal rev­enues.

Some mem­ber states greeted it with the sort of scep­ti­cism usu­ally re­served for a dodgy-look­ing email telling you that you were owed a big tax re­fund.

Ire­land, in par­tic­u­lar, was ve­he­mently op­posed to the pro­posed new tax, say­ing it would es­tab­lish a prece­dent which would un­der­mine Ir­ish tax sovereignty, and dis­cour­age for­eign di­rect in­vest­ment – upon which Ire­land is heav­ily re­liant. The tax would be levied in the state where dig­i­tal trans­ac­tions take place, so states with larger mar­kets would be quids in.

This week, Min­is­ter for Fi­nance Paschal Dono­hoe dou­bled down on Ire­land’s op­po­si­tion to the tax, telling a meet­ing of fi­nance min­is­ters in Brus­sels: “I be­lieve that a change like this . . . could have sig­nif­i­cant ef­fects in re­la­tion to trade and transat­lantic trade. And clearly, as a small, open econ­omy, we are ea­ger to avoid that hap­pen­ing.”

Dono­hoe be­lieves the dig­i­tal tax is­sue should be han­dled by the OECD on a mul­ti­lat­eral ba­sis.

The dig­i­tal sales tax idea was raised by French pres­i­dent Em­manuel Macron at a gath­er­ing of EU lead­ers in Es­to­nia last year. Call­ing the big in­ter­net com­pa­nies “the free­loaders of the mod­ern world”, he pro­posed that the EU tax their rev­enue in each mem­ber state, and not the prof­its posted at their low-tax head­quar­ters.

Ire­land just hap­pens to house the HQs of Face­book, Ap­ple and Google.

France’s min­is­ter for fi­nance Bruno Le Maire went on an EU-wide charm of­fen­sive, and per­suaded more EU states to back the dig­i­tal tax. Even Ger­many, which has been hold­ing out against it, has in­di­cated that it will go along with the tax if there is no broader in­ter­na­tional agree­ment on dig­i­tal tax­a­tion.

How­ever, un­til the OECD comes up with a global strat­egy to force the big tech gi­ants to cough up, the EU strat­egy may be a mere ex­er­cise in tilt­ing at wind­mills.

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