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

The European Commission first proposed a digital services tax in early 2018. After a period of intensive technical and political discussions among member states, a revised proposal for a digital advertising tax was brought to ECOFIN in March 2019 but no agreement was reached there. It was subsequently agreed that member states would focus on supporting the ongoing discussions at OECD level on addressing the tax challenges of digitalisation.

If the OECD work is successful in reaching consensus, pillar 1 of that work should address the same concerns that a digital services tax was trying to address.  How pillar 1 is ultimately implemented will depend on the nature of the eventual agreement reached at the OECD.  The European Commission has indicated it will revisit the issue if agreement is reached at the OECD on the ongoing work. In her recent state of the Union address, Ms Ursula von der Leyen, President of the European Commission, reiterated her support for reaching an international agreement on digital taxation, but highlighted that should an agreement not be made at the OECD, the EU will move forward with its own proposals next year.

Separately, the issue of digital taxation or some form of digital levy has been discussed in the broader context of the EU identifying new EU resources to fund the EU budget.  To date, no proposal has been made in this area.

  I have consistently stated that unilateral digital taxes only serve to increase international trade tensions and undermine the trust required to achieve a lasting global agreement at the OECD. Ireland is committed to finding a global consensus-based solution to issues that have arisen in the international tax framework as a result of increasing digitalisation. I believe the OECD is the best forum at which to achieve this aim. The OECD base erosion and profit shifting, BEPS, inclusive framework is due to publish an update on its ongoing work to address tax and digitalisation in October.  We will engage positively in that work.

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