Hammond move could see big tech players paying less tax here

UK is following Spain in proposing digital services tax, with other countries threatening to follow

The entrance sign to Facebook headquarters in Menlo Park, California. If tech giants pay more tax in big markets, then they will pay less in Ireland. Photograph: Elijah Nouvelage/Reuters

The entrance sign to Facebook headquarters in Menlo Park, California. If tech giants pay more tax in big markets, then they will pay less in Ireland. Photograph: Elijah Nouvelage/Reuters

 

The move by the UK chancellor of the exchequer, Philip Hammond, to establish a digital services tax could pose some threat to Irish tax revenues. At the moment, the big tech players pay tax on a lot of their European earnings in Ireland, where their EU headquarters are based. If they pay more in big markets such as the UK, then they will pay less here.

But much more important is the trend. The UK follows Spain in proposing such a tax and more are threatening to follow. Progress by the OECD in getting a global consensus has been slow – Hammond says that if this happens before 2020 the UK may not go ahead with its solo plan.

However, France is pushing hard at EU level for agreement on just such a tax. This could cost Ireland more revenue. But more serious would be the precedent, particularly with more far-reaching plans on corporate tax harmonisation in the mix. Ireland, of course, has a veto, but will hope that the opposition of some other countries to the plan does not evaporate.

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