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

The European Commission proposal for an interim digital services tax, which seeks to impose a 3% levy on the turnover of certain companies' digital activities, continues to be debated at a political level among member states. The Commission's own impact assessment of its proposed digital services tax estimated that the measure would yield approximately €5 billion per annum across all EU member states. If it is assumed that Ireland would receive a portion of the yield in proportion to Ireland's population, the estimated annual yield in Ireland from the EU proposal is €45 million. However, any such tax paid is likely to be deductible in calculating profits subject to corporation tax and this would reduce Ireland's corporation tax receipts disproportionately. Based on an analysis carried out by the Revenue Commissioners, introducing the EU digital services tax would reduce Ireland's corporation tax receipts by up to €160 million per annum, assuming full deductibility from taxable corporate profits for digital services taxes paid in the EU by companies taxable in Ireland. I shared this work with the Oireachtas Joint Committee on Finance, Public Expenditure and Reform and Taoiseach in May 2018.

This week I met the French Finance Minister, Mr. Bruno le Maire, who has been a leading advocate of the proposals in this area. I reiterated my principled concerns on the issue but we agreed that French and Irish officials would work closely together on the matter at OECD level. Ireland recognises that further change to the international tax framework is necessary to ensure that we reach a stable global consensus for how and where companies should be taxed. I remain convinced that the OECD base erosion and profit shifting, BEPS, inclusive framework is the correct forum for this work to be carried out.

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