Donohoe refuses to be drawn on reports EU is scrutinising Google taxes

Minister for Finance Paschal Donohoe has said it is up to the European Commission to comment on any investigations it may be considering, as he declined to comment on reports that Brussels is scrutinising Google's tax arrangements in Ireland.

Bloomberg reported on Saturday that the commission held in-depth talks with Irish authorities late last year about whether Google complies with rules limiting tax incentives given by individual European countries. No formal investigation has yet been launched, according to the report, but it comes amid a clamp-down at EU and OECD level on the tax practices of digital companies.

Speaking in Washington, where he was attending the IMF-World Bank Spring meetings, Mr Donohoe declined to confirm if he had spoken to competition commissioner Margrethe Vestager on the issue.

"I can't comment on any matters in relation to any particular company. That is the role of the European Commission to comment on any investigations they may or may not be considering. We've a very good working relationship with the European Commission, and it's up to them to determine what kind of investigations they feel are needed across the European Union. "

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Mr Donohoe said that while the issue of tax was “always something that is contested”, Ireland was engaging in the debate.

“I expect to see further change take place in relation to the taxation of the digital sector,” he said. “We’re seeing a growing international debate.”

In particular he pointed to the OECD’s forthcoming work on digital taxation. The Paris-based body is due to publish its roadmap on taxing the digital economy by the end of next year, and will come forward with further details of its plans before the summer.

“The fact that this work is now taking place through the OECD I think is the best arena within which that work can be done,” he said.

“If the European Union had acted unilaterally, this could have resulted in reciprocal measures from other parts of the world,” he added, referring to the EU’s ultimately unsuccessful attempt to introduce an EU-wide digital tax.

Brexit extension

On Brexit, Mr Donohoe warned Irish businesses not to “take their foot off the pedal” in preparing for all Brexit scenarios following the EU’s decision to allow Britain’s departure date to be extended until October 31st. He said the new extension was “the real deal”.

“The extension that we’re now moving into is the real deal now,” he said. “This extension period was granted clearly after much debate within the European Union, and my key message to Irish companies now is that, while there is cost involved in all of this for them – as indeed there is cost involved for the Irish State – that we nor they cannot take their foot of the pedal in terms of getting ready for different Brexit scenarios.”

He said the Government would continue with its recruitment plans for Revenue Commissioners and for any final pieces of work that need to be done either in Dublin Port or in Rosslare.

He said that while the extension period is a benefit because it allows extra time to prepare, “we have to ensure that it doesn’t turn into a window in which companies decide there’s less of a need to get ready”.

Economic forecasts

Speaking yesterday in a panel discussion with IMF chief Christine Lagarde on infrastructure investments, Mr Donohoe said the Government had learned lessons on public spending both from projects that went well and from those that were "subject to debate and scrutiny".

He is also due to update the Cabinet on Tuesday on his return to Dublin on the latest economic forecasts for the country. He will present his Cabinet colleagues with the annual Stability Programme Update, the first key date in the EU’s European Semester budgetary process. It will outline the Department of Finance’s growth projections for this year and next.

Finance ministers and central bank governors finished the spring meetings of the IMF in a more positive mood, saying that global growth was likely to “firm up” in coming months, leading to an improved outlook in 2020.

The ministers and central bank governors on the IMF’s governing body stressed that there remained significant risks for growth from trade tensions, a lack of clear tools to deal with any downturn that might arise and potential shocks such as Brexit, but still expected the economic data to improve.