Ireland: McGrath warns of EU ‘agendas’ over tax

(The Times) -- The European Commission and some of the largest EU member states are making no attempt to hide their efforts to change Irish tax policy, Michael McGrath has claimed.

Discussing a new method of taxing foreign multinationals operating in the EU, the Fianna Fáil finance spokesman said that the commission and some member states were not trying to “conceal” their individual tax agendas.

The finance ministers of France, Germany, Italy and Spain last week wrote to the European Commission calling for an “equalisation tax”. The plan could erode Irish corporate tax revenues as it would require technology companies to pay a levy based on their sales in each member state. Mr McGrath supported the Base Erosion and Profit Shifting (Beps) project by the Organisation for Economic Co-operation and Development (OECD) as the best way to ensure companies were properly taxed.

“This goes to the very heart of our national interest as a country . . . we simply have to hold the line on this and protect Ireland’s sovereignty over the areas of corporation tax.

“Yes, we do have to continue to engage at OECD level in relation to the Beps project to bring about greater transparency in relation to corporation tax but make no mistake about it, the agenda from the European Commission and from some of the larger member states is very clear — they’re not even seeking to conceal it,” Mr McGrath told RTÉ’s This Week programme.

Ten countries have signed a statement calling on the commission to examine the feasibility of the so-called equalisation tax. The letter, signed by the finance ministers of Italy, Spain, Greece, Portugal, Bulgaria, Slovenia, Romania, Austria, France and Germany, proposes that internet companies should pay a tax on their turnover that would “reflect some of what these companies should be paying in terms of corporation tax”. At a meeting of finance ministers in Estonia over the weekend, Paschal Donohoe was in opposition to the proposed tax.

“Ireland does not support the implementation of an equalisation tax. We believe that such a measure would create very, very considerable difficulties. In order for the fair taxation of the digital sector to be dealt with it has to be done on a global basis and it has to be done on a basis that recognises that digital transactions are now an inherent part of the entire economy and we believe the implementation of a measure like this would cause a very considerable difficulty.” RTÉ reported that the strongest level of opposition to the proposed tax at the meeting came from Ireland, Malta and Cyprus. “We instead have argued that the appropriate forum and the most effective way in which this can be dealt with is through the OECD,” Mr Donohoe said.

Mr McGrath also said that, if in power, Fianna Fáil would block efforts by Jean-Claude Juncker to remove the ministerial veto of countries, including Ireland, on taxation changes, as proposed by the president of the commission. He said the proposal to move to a system of qualified majority voting was “a non-runner” and that the government would “exercise its veto”.

Leo Varadkar has indicated that he is opposed to Mr Juncker’s proposal.

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