Accountants slam OECD tax proposals for digital sector

28th March 2014

MGI World Accountants slam OECD tax proposals for digital sector

Radical plans to alter the way companies in the digital economy are taxed across borders have been presented by the OECD. But the Paris-based organisation’s plans have been heavily criticised by accountants in Ireland, who believe they would adversely hit smaller economies.

Proposed changes to the way high-tech multinational companies are taxed will only benefit large countries with large markets, claims Chartered Accountants Ireland. It says the proposals would be like taxing agricultural products where they are sold rather than where they are grown.

The organisation’s tax director, Brian Keegan, said: “These proposals, which are a key element of a larger project to revise the way multinational companies are taxed, would fundamentally change the business model for companies based in Ireland.  These proposals would move company profits away from where value is created, in countries like Ireland, to locations where products are sold – principally the major European countries.”

Ireland would be particularly vulnerable because it accounts for such a large tranche of the global digital economy. According to OECD data, the country is second only to India for information and communication technology exports.

The OECD proposals are open for consultation until April 14th. Mr Keegan called on companies to submit their views to press the business case for rejecting them. “We need the commercial point of view to be fed into these proposals, before they become concrete to the detriment of Irish business and Irish taxpayers generally,” he said.

It is part of a broader strategy aimed at corporate taxation. In February the OECD announced a new global framework for enhancing tax transparency as part of a global efforts to bear down on businesses. Under this scheme each country will be called on to gather information from their financial institutions and automatically share this with other jurisdictions every year.

Secretary-general of the body, Angel Gurría, said then that the standard on automatic exchange of information would improve international tax co-operation and put governments “back on a more even footing”.

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