DUBLIN: The EU’s proposed ‘temporary’ digital levy has been fiercely opposed by Ireland and several other member countries. Last Wednesday, the EU Commission published proposals on digital taxation which it said would “ensure that all companies pay fair tax in the EU”.
Unveiling the proposals, EU Economic and Financial Affairs Commissioner Pierre Moscovici said: “The digital sector is booming. It is fast catching up with the EU traditional economy. But tax rules have not kept pace. Many digital companies benefit from public services without paying their fair share.”
The centrepiece of the Commission’s proposals is the imposition of a “temporary” 3pc levy on digital companies’ sales on sales of online advertising, “digital intermediary activities… which can facilitate the sale of goods and services” and the sale of data from user-provided information. However, in order “to ensure that smaller-scale startups and scale-up businesses remain unburdened”, the levy will be restricted to companies with annual global revenues in excess of €750m and EU revenues of €50m. Fortunately, the OECD has a good track record in securing international agreement on tax. Since 2012 its BEPS (base erosion and profit shifting) project has been gradually ironing out the wrinkles that have allowed multinationals, including the major digital companies, to play individual countries off against one another and reduce their tax bills.
While the opposition from Ireland and other member countries is likely to stall the Commission’s digital levy for the time being, there is little doubt but that major changes are coming in digital taxation and that these changes will almost certainly not be to Ireland’s benefit.
