Varadkar says taxing tech firms too much will drive them away

Taoiseach Leo Varadkar has warned fellow EU leaders that taxing digital companies too heavily would inhibit their development or drive them away.

Mr Varadkar, who made his comments at Thursday night's Tallinn Digital Summit dinner, faces renewed pressure over the Government's opposition to harmonisation of corporate taxes from countries like France and Germany who, ahead of the meeting stressed that they saw it as a priority.

Ireland is home to many of the world's biggest tech companies including Facebook, Google, LinkedIn, Apple and Microsoft.

"The point that I made to European leaders was that if we want to foster innovation and Europe to become a digital leader the solution is not more taxes and more regulation, it's actually the opposite.

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“And if people bemoan the fact that there is no European Google or European Facebook or European LinkedIn, my view is that if you want those companies to generate in Europe it not through heavy taxes and more regulation that you will achieve that.”

He said that Ireland had significant support for its position from the Nordic and Benelux countries.

The European Commission, in a report, has said the EU should push ahead with overhauling the rules around how digital firms should be taxed even if other jurisdictions fail to follow suit. Firms such as Google, Amazon and Facebook, who are accused of paying too little tax in Europe by routing most of their profits to low-rate countries such as Ireland or Luxembourg. The commission's report is being considered at the summit in the Estonian capital and aims to pave the way for a legislative proposal on EU rules for the taxation of profits in the digital economy, possibly as early as next year.

Mr Varadkar, speaking to journalists on his way in to the summit on Friday morning, also warned that the threat to thousands of jobs in Bombardier, situated in Belfast, "might well be turn out to be a lesson for the United Kingdom" about its vulnerability.

The future of 4,500 workers at the aircraft manufacturer hangs in the balance after a punitive ruling against the company in the US this week. The US department of commerce backed a complaint by US aerospace giant Boeing that its Canadian rival had dumped below cost aircraft into the US market. In a preliminary report, it proposes imposing tariffs of almost 220 per cent on sales of the planes in the US, which would send the base price of each aircraft soaring.

“When the Brexit referendum went through... there’s been a lot of talk about a new trade deal with the US and how great that would be for the UK, and yet we’re now talking about the possibility of a trade war between the UK and the US.... What it demonstrates is that every country in Europe is a small country... and we’re actually stronger together as a trading bloc.”

Mr Varadkar expressed concern at reports on Friday that the European Commission is proposing significant concessions on beef to the South American trading bloc countries of Mercosur in trade negotiations. Although he prided himself on being a supporter of free trade, he said, it was necessary to consider how exposed the Irish beef sector was in the context of Brexit and the need to maintain animal health and welfare standards. He would make those points to the Commission President Jean Claude Juncker when he met him later in the day, Mr Varadkar said.