Michael McGrath (Cork South Central, Fianna Fail)
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72. To ask the Minister for Finance his views on the proposals by certain EU member states on changes to the way in which digital or high tech multinational companies are taxed; and if he will make a statement on the matter. [4527/18]

Michael McGrath (Cork South Central, Fianna Fail)
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I refer to the emerging EU proposals on the taxation of digital revenues. We have a particular interest in this issue, given that this is a country in which some of the world's largest Internet-based companies are located. I am aware of Revenue's guidance to the Minister which has been released through a freedom of information request. What is the Government's position on the proposals made?

Paschal Donohoe (Dublin Central, Fine Gael)
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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.

Michael McGrath (Cork South Central, Fianna Fail)
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Is it the intention that the OECD and EU proposals will be aligned, that is, there will be no unilateral action at EU level? Is it the Government's position that this issue needs to be dealt with on a multilateral basis that extends beyond the European Union? Will the Minister confirm that he has received a briefing document from Revenue on the emerging digital revenue proposals from some of the larger EU member states, including France and Germany? It has been reported that Revenue has made it clear that it is likely Ireland would be the worst hit eurozone state by the proposals. Is the Minister against the proposals emerging from the European Union or which have been articulated by some of the larger member states?

Will he stick to the position that there should be no unilateral action at EU level?

Paschal Donohoe (Dublin Central, Fine Gael)
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It is very much my intention and objective that the work of the OECD and the European Union should be aligned. This was reflected in the conclusions of the European Council and the recent conclusions on the matter of the Eurogroup and ECOFIN. On whether there will be unilateral action by other member states, that is an issue on which I cannot give the Deputy a commitment. As he will be aware, Italy has indicated that it may look to bring forward such a tax. There is already a form of taxation of digital activity in the United Kingdom. Member states may decide to pursue their own policy in the area. It is my objective that any action the European Union takes will be aligned with the direction of travel of the OECD.

Michael McGrath (Cork South Central, Fianna Fail)
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I thank the Minister. Will he confirm receipt of a briefing paper from the Revenue Commissioner which, it is reported, states the proposals would result in a significant fall off in corporation and payroll tax receipts for Ireland, as well as impacting negatively on the ability of the State to attract inward investment in the future? The point is also made in the briefing document that the proposals would likely lead to greater taxing rights in larger countries. This is part of an overall attack on Ireland's corporation tax system. We already have the common consolidated corporate tax base proposals. We know that when profits are attributed based on sales and the location of assets and employees, Ireland will undoubtedly be a very significant loser if the proposals are implemented. I welcome the clarification given by the Minister. I take it from him that it is the position of the Government that the EU action should very much be aligned with that of the OECD in this respect.

Paschal Donohoe (Dublin Central, Fine Gael)
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On the Deputy's question about the common consolidated corporate tax base policy, I will continue to oppose such a policy move and will oppose any change in the decision-making process in that policy area. My objective overall is, as I said, to ensure the work of the European Union and the OECD is aligned. I say this because I believe the best way to avoid trading difficulties or tax competition is for all of this to take place on a global and co-ordinated level. As I said in response to the Deputy's earlier question, it is entirely possible within the legal framework available to member states for them to pursue unilateral action in accordance with their tax sovereignty. We have seen a number of countries begin to consider this. I have outlined my approach to the matter.