Ireland's concerns over #EUDigitalTax gaining wider support

Ireland’s concerns over how the European Union should proceed with taxing large digital businesses are shared by a growing number of countries, Finance Minister Paschal Donohoe (pictured) has told Reuters, writes Padraic Halpin.

Italy, France, Germany and Spain are pushing to change tax legislation for tech corporations accused of paying too little tax in the EU but have faced resistance from smaller nations like Ireland, who fear the reform could hurt their economies.

“From talking bilaterally to a number of my (EU) colleagues since the meeting we had in Estonia (in September), the concerns that we have in relation to digital taxation are broadly shared...I would say by a growing number of countries,” Donohoe said in an interview in his Dublin office.

Ireland’s low 12.5% corporate tax rate has long made it a hub for investment from the likes of Google and Facebook. Dublin has found an ally in Hungary on the issue and has also been boosting alliances with Nordic and Baltic states since like-minded Britain voted in 2016 to leave the EU.

Donohoe said such alliances would help with his nomination of Irish central bank chief Philip Lane for the post of European Central Bank vice president.

Lane is so far the only declared candidate two days before nominations close but Donohoe is “certain” there will be at least one more, likely proposed by Spain. Its economy minister Luis de Guindos has long been considered the favourite for the job.

Donohoe, who added the finance ministry to his brief as public expenditure minister in June, inherited an economy that had recovered rapidly from collapse a decade ago and is almost certain to have been the best performing in Europe for a fourth successive year in 2017.

Having warned just weeks into his new role that Ireland must be careful not to overheat the economy, Donohoe said on Monday (5 February) those risks remained unchanged but that he did not believe the economy is currently overheating.

“Secondly, if I look at the wage growth that is taking place in the economy, while it does vary very strongly sector to sector, on average it is in line with the kind of growth rate in national income that we are seeing at the moment.”

Donohoe, whose department last forecast in October that the economy would grow by 3.5% in 2018, said he was confident that growth would come in at 3.5-3.75% this year.

Share this article: