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  1. Spotlight on Policy
4 January 2019

Irish opposition forces EU to water down digital tax

The revised proposal could accrue just half the revenue of the original tax, but there is still no guarantee it will be passed by member states. 

By Augusta Riddy

Attempts to install an EU-wide tax on tech giants that could bring in €5bn a year are faltering in the face of opposition from certain member states, including Ireland, Denmark and Sweden.

After failing to reach a consensus for a proposed three per cent tax on revenues of digital companies whose worldwide revenue exceeds €750m, a revised plan has been submitted by Germany and France. The two nations, responding to voter pressure, are eager to have something in place by the EU elections in May 2019. The new version proposes a three per cent tax just on advertising sales which, if implemented, is likely to exempt companies such as Amazon and Spotify, whose business model is not centred on advertising unlike those of Google and Facebook’s. It is also expected to raise far less money for the EU; the Financial Times reported that one French diplomat estimated it would be half the original predicted sum. 

Despite the considerable climb-down, Ireland – whose economy benefits from acting as a financial centre for corporate giants – is not yet convinced. A Finance Department spokesperson told Spotlight that “Ireland continues to have strong principled concerns about this policy direction.” However, the member state would continue to “engage constructively” in the debate to find “a lasting solution to issues arising from the digitisation of the economy”.

Meanwhile, activists who led a campaign through the online site Avaaz to “Make the Tech Giants Pay Their Taxes!” have expressed disappointment at the EU’s failure to pass the “revolutionary law”. When Spotlight approached Avaaz, campaign director Christoph Schott had some strong words for member states: “We all pay our taxes, so why are these billionaires being let off the hook? While it’s a step forward to force tax-dodging tech giants to pay at least some tax, it’s not enough. It’s time our governments stopped bowing to Silicon Valley and force big tech to pay big tax.” 

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