The CCAB-I responded to the European Commission’s consultation on the taxation of the digital economy. The Commission put forward a number of proposals including the introduction of an equalisation tax for the purposes of devising an approach at EU level to taxation of the digital economy. The CCAB-I re-affirms its position that direct taxation is a sovereign matter for each member state and as such, the taxation of the digital economy is outside of the remit of the European Commission.

Current permanent establishment rules along with rules for allocating profits of multinational groups have been identified by the Commission as requiring reform in order to fully capture taxation of the digital economy. To this end, the Commission continues to put forward the view that the Common Consolidated Corporate Tax Base (CCCTB) provides an EU framework for taxing digital businesses along with other corporate sectors operating in the EU. In the short term, the Commission also wants to introduce a tax in the form of an equalisation tax on turnover or a withholding tax on digital transactions or a levy on revenues generated from the provision of digital services or advertising activity.

In its response to the Commission’s consultation, the CCAB-I opposes any short term tax or any other direct tax measure at EU level as such measures are in contravention of the principle that each member state has full control over its fiscal matters. You can read the CCAB-I response on the Chartered Accountants Ireland website www.charteredaccountants.ie