'Business end' of global tax shake-up has Ireland in its sights
The Government appears to be drawing closer to formally conceding the tech giants, including Google, Twitter, and Facebook, which have significant bases in Ireland will be taxed by individual governments on the revenues they generate across Europe.
It comes as the Organisation for Economic Cooperation and Development effectively said there was agreement for its "road map" for a global shakeup in the way countries around the world tax the digital giants, saying the accord could be reached by the end of next year - much earlier than many had thought possible.
A government spokesman described the agreement as the OECD getting to "the business end" of global tax reform.
Since the global crisis, the OECD has been leading the initiative of 129 countries for a shake-up in the way governments tax companies amid huge discontent among the voters of many countries that the multinationals avoid paying their fair share of taxes and thus fail to contribute to tax revenues to pay for essential public services.
Ireland since securing its competitive 12.5% corporate tax regime from the EU in the 1990s has long fought back against accusations by large European countries, including France, that the Government is involved in some sort of "corporate tax banditry" and depriving others of the corporate tax revenues that are rightly theirs.
More recently, Ireland and others, including the Netherlands, shot down an EU plan driven by Tax Commissioner Pierre Moscovici to bring in a minimum digital tax across Europe.
The Government had consistently argued that the EU shouldn't jump the gun and should await the deliberations of the OECD to set new global rules, not just for the EU.
In recent weeks, Finance Minister Paschal Donohoe has conceded that change in the digital tax world was coming, but through the auspices of the OECD.
There are, however, dangers lurking to Ireland's wider corporate tax regime.
"Today’s broad agreement on the technical roadmap must be followed by strong political support toward a solution that maintains, reinforces and improves the international tax system. The health of all our economies depends on it," said OECD secretary-general Angel Gurría.
Brian Keegan, director of public policy and taxation at Chartered Accountants Ireland, said Ireland has so far fought successfully in engaging in international tax proposals, saying he was "confident that this will be the case again this time".
