EU Digital tax proposal appears to be targeted against the US

22 March, 2018

Start adding items to your reading lists:
or
Save this item to:
This item has been saved to your reading list.

Commenting on the EU Digital tax proposal, PwC's Head of Tax, Joe Tynan, said:  "Today has seen the launch of the EU's Digital Tax proposals. Various drafts have been widely leaked and the text released today is in line with the previous documents. The EU have stated that there is a high political pressure for Member States to adopt short-term measures."

"The EU themselves are unhappy with what they are proposing. They have said "We are nonetheless aware that such a short-term measure is sub-optimal and has a series of drawbacks and limitations.""

"It is hard to see that a country could impose a tax on companies of a certain size in one sector without breaching State Aid rules which do not allow for discrimination."

Joe Tynan Head of Tax, PwC Ireland

"The OECD published their interim report on Friday. They are not in favour of interim measures. In general, the OECD does not favour unilaterally measures. The EU Digital Tax is a crude tax on turnover and will result in loss making companies being taxed on the same amount as a very profitable companies with high margins. It is mostly US companies that will be subject to the tax. At a time of tension on international trade, this "levy" on turnover will not help. It appears to be targeted against our largest trading partner, the US.  The Digital Tax will be treated as an expense and therefore deductible against corporate profits and corporate tax. As many of these companies are based in and paying tax in Ireland, it will reduce the corporate tax take in Ireland. This is a unilateral measure by the EU. The challenge of taxing Digital companies requires a multi territory response. We should work with the OECD to agree a common framework. Ireland has consistently stated that the forum for discussion on the digital economy should be the OECD and we echo those comments." 

"The EU say they are doing this as, if they don't, individual EU countries will do so in any event. It is hard to see that a country could impose a tax on companies of a certain size in one sector without breaching State Aid rules which do not allow for discrimination.  Indeed, this is an area that the EU have previously explored from a State Aid perspective."

ENDS

About PwC
At PwC, our purpose is to build trust in society and solve important problems. We’re a network of firms in 158 countries with more than 236,000 people who are committed to delivering quality in assurance, advisory and tax services. Find out more and tell us what matters to you by visiting us at www.pwc.com.

PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. Please see www.pwc.com/structure for further details.

©2018 PwC. All rights reserved

Contact us

Joe Tynan
Partner, PwC Ireland (Republic of)
Tel: +353 1 792 6399
Email

Johanna Dehaene
Corporate Communications, PwC Ireland (Republic of)
Tel: +353 1 792 6547
Email

Follow PwC Ireland