Ireland joins fight against Europe’s plans for a digital tax

8 Oct 2018

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Digital giants fear a double tax on the same revenue.

Ireland has made a joint submission alongside the Czech Republic, Sweden and Finland to thwart digital tax proposals from the European Commission (EC).

The EC is looking to raise €5bn a year through the introduction of a digital tax of 3pc on the revenues of tech giants, rather than their profits. The tax targets companies with worldwide annual revenues of €750m or more and that have EU taxable revenues of at least €50m.

The drive is being largely led by France, Germany and the UK, for a tougher approach to alleged tax avoidance by tech giants such as Facebook, Google, Apple and Spotify.

Joint submissions

Over the weekend (7 October) it emerged that Ireland has made a joint submission along with three other states warning that the proposals breach international treaty obligations. Specifically, they have warned that the tax would contravene standards agreed in an OECD Inclusive Framework on BEPS (base erosion and profit sharing), which has been agreed by 115 countries and jurisdictions.

Tech giants have warned that the proposed digital services tax – which the Austrian EU presidency could approve by December – could see them taxed double for the same revenue.

The tax is to be applied to revenues from end-user targeted advertising, transmissions from data collected, and social networking that could lead to the supply of goods and services, according to The Irish Times.

Ireland stands to lose up to €160m a year in lost tax revenue if the EU presses ahead with the new digital tax plans.

The proposed tax is expected to be discussed on 26 October at an expert meeting.

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years