Special tax on digital companies would ‘harm’ EU’s attractiveness

American Chamber of Commerce suggests tax on turnover could cause ‘economic damage’

The American Chamber of Commerce advanced doubt surrounding the possibility of ring-fencing the digital economy without have an impact on the wider economy. Photograph: iStock

The American Chamber of Commerce advanced doubt surrounding the possibility of ring-fencing the digital economy without have an impact on the wider economy. Photograph: iStock

 

A European Commission proposal to impose a special tax on the sales of big digital companies in the European Union will harm the EU’s attractiveness for US investment, the American Chamber of Commerce Ireland has said.

The lobby group which represents around 700 US companies operating from Ireland suggested that proposals, which are being discussed today at a meeting of the commission, should be agreed internationally through the OECD.

The American Chamber, led by Mark Redmond, noted its concern surrounding the “economic damage that taxes on turnover could cause”.

That relates to the suggestion from the commission that the tax would be levied on revenues from targeted advertising and from charging users for the use of digital platforms, at a rate expected to be between 1 and 5 per cent.

“Such levies target the turnover of digitised enterprises without a link to either profits or the value creation in the jurisdiction where they are levied. Whilst this may or may not be an appropriate policy objective, it is not one that should be described as a corporate tax as it has no correlation to net income or profits,” the Chamber said.

Additionally, the group advanced doubt surrounding the possibility of ring-fencing the digital economy without have an impact on the wider economy.

“All businesses are becoming digitised and or using digital technology in order to be competitive in terms of price and efficiency,” it said.

It also suggested the burden of complying with the tax and the affect that would have on trade “would be significant and have a negative impact on [the EU’s] attractiveness for global functions”.