Ireland faces the prospect of becoming “collateral damage” if US tech giants are targeted in the looming trade war with the EU, write Craig Hughes and Brian Mahon.
French MEP and chair of the European Parliament’s trade committee Bernd Lange said yesterday that a tariff on the US tech giants was one retaliatory option available to the EU.
“If we are really in an escalation level, then of course we will have a look to the tech giants as well.
“I would say this is not our first choice,” he said.
If the European Commission responded with a 20% tariff on US digital services, it would directly affect the US tech companies’ profits that are paid in Ireland, and would therefore reduce the amount of corporation tax collected.
Ireland is home to the European headquarters of several US multinational tech companies including Apple, Google and Amazon.
The firms benefit from our low corporation tax of 12.5% and pay most of their taxes here instead of in the US.
Taoiseach Micheál Martin said he is opposed to a digital services tax and believes a response that is “clearly calculated and calibrated not to bring more damage upon the European economy and European citizens” is needed.
Finance Minister Paschal Donohoe pointed out that other European countries also had “large tech sectors” that they want to protect.
“We know the EU are going to have to respond, but at this point in time, I don’t think it’s appropriate to begin to negotiate publicly amongst ourselves regarding what that response could look like.
“Ireland will be fully part of what the EU response is,” he added.
Ireland’s corporate tax rate has been frequently criticised by our European neighbours, but Mr Donohoe said he does not believe that there would be limited sympathy for Ireland in this instance.
“Each government is now looking for solidarity and support to try to put together an overall response that’s balanced and doesn’t add even more to the difficulties,” he said.
Yesterday, economist Austin Hughes described Mr Lange’s suggestion about retaliatory tariffs against the tech giants as “short-sighted”.
He said: “The real issue there is we’re basically the midAtlantic battle ground for arguments between Europe and the US, both of which who have different economic models to us.”
Mr Hughes said there was a risk that Ireland could become “collateral damage” in the row between EU and US but he added: “We have a voice, at least, in the EU; we don’t in the US”.
