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Changes to global tax regime will be a balancing act for Ireland - Donohoe



Taxing times: Finance Minister Paschal Donohoe

Taxing times: Finance Minister Paschal Donohoe


Taxing times: Finance Minister Paschal Donohoe

Finance Minister Paschal Donohoe has said "big changes" are coming in international taxation and that Ireland had to balance ways to make progress on the agenda with its right to compete economically.

However, his department yesterday slapped down proposals put forward by Phil Hogan and the European Commission suggesting a levy on tech giants to help fund the €750bn Covid-19 recovery fund.

A process managed by the Organisation for Economic Co-operation and Development (OECD) to restructure the global tax system stalled recently as the United States said it would not back it.

"We have to find ways we can continue to make progress while respecting the rights of small countries on ways they can compete," Minister Donohoe said during an online meeting that was hosted by PwC.

The focus of the push for a new digital tax, including that backed by Brussels, would mean taxing revenue where goods are sold rather than on where profits are reported.

The minister was responding to a question about the Apple tax case launched by the European Commission against Ireland.

The Commission lost the case, but it had caused "very significant reputational difficulties" for Ireland over the last number of years, Mr Donohoe said.

Separately, yesterday the Government said it will not support proposals that were put forward by Mr Hogan and the European Commission suggesting a levy on tech giants to help fund the €750bn Covid-19 recovery fund.

Last night Mr Hogan stood by the proposals.

He said several member states - including Ireland - must review their total opposition to giving taxation powers to Brussels if the €750bn Covid-19 aid package is to be properly funded.

Along with Commission President Ursula von der Leyen, he said that new EU-wide taxes should be raised directly by Brussels in order to help fund the package to fight the effects of coronavirus.

Most of the funding for the rescue package is to be borrowed and repaid by member states.

But the Commission's idea includes a plan for Brussels itself to collect an EU-wide levy from big technology companies, as well as taxes on environmentally unfriendly plastics and imports.

While Mr Donohoe's department last night poured cold water on the idea, it won support elsewhere in Irish political circles.

Labour's finance spokesman Ged Nash was more positive towards the proposals.

"It's Labour Party policy that a digital sales tax should be levied so that the giants of the tech world pay a fairer share of tax," he said.

"A levy like this is required to help enable countries to capture revenue to rebuild and enhance stretched public services and address social and economic inequalities in Ireland and across the EU," he added.

Irish Independent