Michael McGrath (Cork South Central, Fianna Fail) | Oireachtas source

I will set out the Fianna Fáil position. We regard the digital tax proposals as the first step towards tax harmonisation through the back door. It is the thin end of the wedge and it does represent a transfer of taxing rights. It will also represent a transfer of actual tax revenue from smaller member states, such as Ireland, to larger member states. There is a need, undoubtedly, for further reform and changes to the way multinationals, particularly in the technology sector, are taxed. It should be done on a truly multilateral basis, however, at the level of the Organisation for Economic Co-operation and Development, OECD. There should be no mistake about this. Ireland would be a significant loser if this came to pass.

The Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach heard from the Revenue Commissioners on this issue when we met with it earlier this year. It was evident that there were many unanswered questions at that point as to how this would work. I believe they remain unanswered. It would, however, represent a transfer of taxing rights in the sense that where the service users are based is where most tax is going to be paid. Given the size of our population and economy relative to the European Union, it would not take a genius to work out we will be a major loser in that context.

The next step will be the common consolidated corporate tax base, CCCTB. The European Commission keeps resurrecting these proposals which would represent a firm step towards tax harmonisation. Taxation is a national competence. We should protect and safeguard it. If we were to move towards CCCTB, there would be a system where profits to be taxed would be apportioned on the basis of where employees and assets are based and where turnover occurs. Ireland would again be a major loser, perhaps the single biggest loser in the European Union. We do have to be open to change and continue to co-operate with the OECD moves in this direction. In my view, however, this proposal on digital taxation is an attempt by larger countries within the European Union to secure taxing rights from smaller countries like Ireland.

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