Paschal Donohoe (Dublin Central, Fine Gael) | Oireachtas source

A number of EU member states are seeking new approaches to taxing large digital businesses that operate across borders. Concerns focus on the ability of a company to have many users or customers in a country without being liable to corporation tax in that country.

Leaders at the European Council recognised the importance of a global approach to the issue of digital taxation. Finance Ministers have also agreed Council conclusions building on the direction given by leaders and their work will continue with a view to reaching a global consensus.

The European Council conclusions reflect Ireland's key priorities. There is no commitment to separate action at EU level and the primary objective remains achieving alignment with OECD work in this area. The conclusions also recognise that there is no agreement on whether temporary action is needed, pending the completion of global work.

The OECD is carrying out important research into taxing digital business. We expect that work to conclude in April. It will provide a vital input into this policy area. The Commission's proposal is also expected to be published before the end of March.

Aggressive tax planning by multinational companies is a global problem that requires a global solution. Ireland has played a full part in implementing international tax reforms and we are holding a consultation process on how we will implement the remaining OECD base erosion and profit shifting, BEPS, reforms. US tax reforms will also play a crucial role in preventing aggressive tax planning by US companies from achieving low global effective tax rates.

Applying different rules within the European Union to what is being applied globally is likely to result in double taxation and greater uncertainty. We should not rush into short-term solutions without a comprehensive evaluation of the potential risks. It is important, therefore, that we not pre-empt this work by attempting to reach answers without properly considering the questions. At a basic level, we must be careful about segregating companies or businesses as being either digital or not digital businesses.

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