Statement from the American Chamber of Commerce Ireland: Digital Tax will harm EU’s attractiveness for US investment
The American Chamber of Commerce Ireland represents over 700 US companies operating from Ireland, employing more than 155,000 people here directly. Regarding the upcoming proposals from the European Commission for a Digital Tax on EU turnover, the American Chamber puts forward the following points regarding the basis underpinning the proposals:
- The American Chamber believes it is essential that any proposals in this area are agreed internationally through the OECD. This will ensure European companies’ competitiveness and guarantee global consistency in an international level playing field, whilst respecting Member States’ competences to set their own tax policies
- The Chamber is most concerned about the economic damage that taxes on turnover could cause. Such levies target the turnover of digitalised 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/profits.
- The Chamber believes it is therefore essential to take the time to establish a multilateral consensus on the future of taxation in a digitalised economy. We acknowledge that it will not be as swift as deploying unilateral solutions (which may ultimately work against an international solution). Ireland and the EU should have a stronger and clearer voice in this international discussion.
- The Chamber supports the decision and timetable agreed at the OECD that the Task Force on the Digital Economy will continue its work within the Inclusive Framework delivering an interim report in March 2018 and a final report in 2020.
- The Chamber will continue to strongly support the Government’s position that promotes a multilateral approach to taxation over reactive and economically damaging unilateral measures.
- The Chamber does not believe it is possible to ring-fence the ‘digital’ economy without a collateral impact on the broader economy. All businesses are becoming digitalised and/or using digital technology in order to be competitive in terms of price and efficiency.
- The Chamber believes businesses also aim to meet customers and citizens’ needs with their service offerings. This is true of digital, digitalised, and digitalising businesses, and across all industries, including the industries that the EU has a competitive advantage and trade surpluses in.
- The Chamber supports the implementation of the EU’s Digital Single Market strategy, focussing on policies and regulatory frameworks promoting the take-up of digital technologies by all businesses to grow their markets and improve competitiveness. In analysing and assessing the impact of any ‘digital’ tax the impact should be understood in these broader terms and the assessment should include any negative impact on the incentives to digitise, including the broader cost of lost opportunities.
- The Chamber wishes to avoid arbitrary lines which encourage avoidance and distort decisions, and to protect against state aid challenges. Because to complete this, new taxation systems would need to be introduced across all industries. Accordingly, the compliance burden and impact on business, trade, and investment in the EU would be significant and have a negative impact on its attractiveness for global functions.
- Finally, regarding the debate on the ‘fair taxation of the digital economy,’ the Chamber argues this should be anchored in the broader European digital policy agenda (i.e. the EU's Digital Single Market Strategy).The Digital Single Market strategy rightly recognises that the key to unlocking Europe’s future growth and job creation potential lies in the digital transformation of the European economy and society.