Should Ireland share its corporation tax bonanza with the EU?
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What is the main topic discussed in this episode?
Hello, I'm Kieran Hancock. Welcome to Inside Business. Later in the show, I'll be talking to Fiona Redden about Irish house prices and if and when they might begin to fall. But first, we'll start with Ireland's bulging tax receipts from the major multinationals. Last week, in an interview with Naomi O'Leary of the Irish Times, French Finance Minister Roland Lescure suggested that this bounty should be shared around Europe to reflect where the revenue is generated. Naturally, this went down like a lead balloon in Dublin with our Minister for Finance Simon Harris. To discuss this, I'm joined on the line by Naomi, who is based in Paris for the Irish Times, and by our in-house corporate tax expert, Cliff Taylor.
I began by asking Naomi to recap the French Minister's demand for a share of our corporate tax wag. Here we go.
So I spoke to the French finance minister Roland Lescure last week in his office in the Economy Ministry in Paris, which is like overlooking the Seine. And I asked him if he could, if he wouldn't mind, telling me in the bluntest possible terms, where the main differences between the thinking in France and the thinking in Ireland lie on the issues of digital rules and on taxation. So he kind of started off with a preamble about how Ireland was a very constructive partner and he had lots of things he admired about Ireland and he was confident about the abilities of the Irish presidency and so forth. And then he got, you know, he said some pretty blunt things, which was essentially Ireland is enjoying quite a large share of the available uh global tax take from multinational tech giants because they're headquartered in Ireland.
And he said, we need to make sure that everyone gets a fair share of a cake that's a European cake, not not an Irish cake. So, what he's talking about there is basically a different view about where taxation should be leveled. So there's A kind of school of thought that the system of taxation that we have at the moment is outdated since the advent of digital business models.
What is the French finance minister’s proposal for sharing Ireland’s corporate tax revenue?
So now that you can have a company based in one place who has customers on the other side of the world who are buying its products and stuff, there's an argument that The taxation of revenues should take place where the users or consumers of the goods are located rather than where the company headquarters is. Um, so the view of many people in France, and not just in France, but on the European continent, is that the huge tax take that Ireland takes because it's got so many tech multinationals located in it, sh should more rightly actually be shared among other European countries because it reflects um earnings by those tech companies from different European countries. So customers in France, customers in Italy and so on paying into them.
So that's that's basically what he's talking about.
Yeah, it's it's not a new argument though, is it? Uh I mean France has been banging this drone for a long time.
Yeah, it's they moved to have an EU wide digital tax reform basically about ten years ago. And it would have been aimed to reflect that other understanding of uh of how tax should be calculated. Um and it ran aground because of the opposition of Ireland among other EU member states. Um, Ireland has always had the position that if we are going to do a reform about international taxation, it needs to take place essentially evolving involving the United States, because if it doesn't involve the United States, it would just disadvantage Ireland and multinationals would just, you know, move out of Ireland and y it needs to be um fair competition internationally. So that's always been Ireland's position.
This idea for an EU reform foundered and France went ahead and passed its own digital tax and so did a number of other European countries, including Italy and Portugal and others. Um, but they haven't let go of the idea. And I think it's interesting and important that it's expressed, and also kind of interesting that it received so much attention in Ireland and was, you know, seen as a kind of shocking statement, uh, which it was, because it just reflects a very, very mainstream view um in the rest of Europe about Ireland's economic model that maybe we're not as aware of as we could be.
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