French president Emmanuel Macron says that his proposal for a new revenue tax for US tech groups is not a threat to the Irish economy but aimed at creating a level playing field for all companies.
Tensions between Paris and Dublin have risen over Mr Macron's "digital tax" proposal to tax technology multinationals such as Google, Apple and Facebook on the revenues, rather than the profits, that they generate in each country.
The French leader's plan is aimed at stopping the companies structuring their businesses so that profits are booked in low-tax countries such as Ireland and Luxembourg.
Mr Macron said that the Irish Government has nothing to fear from his proposals.
"The idea is to not have taxation that is asymmetrical between countries. The idea is to achieve European progress," Mr Macron said in response to a question from The Irish Times at his new year's press conference.
The failure to tax multinational internet companies such as Google, Facebook and Apple was unfair and hurts the European technology industry, he said.
“The digital actors are actors of our economic transformation,” Mr Macron said. “That is a good thing. But today, the big digital multinationals do not contribute as they should to financing the public good.
"They often don't pay tax in Europe. While contributing to this transition, these actors are often in competition with actors of the real economy, either state-financed workers, or European digital actors who pay taxes in Europe."
‘Distortion’
Mr Macron said that the “distortion” created between US multinationals and European companies was “bad for European industry”.
“We have [individually] created fiscal regimes that are very favourable to international digital actors because there is no European unity on the subject. I understand that it is in the short term interest of certain countries to continue to develop [such tax regimes]. But this goes against the collective interest.”
The French president disputed the assertion by Irish officials that internet giants would leave Europe if they have to pay high taxes.
"I do not believe that Google, Facebook, Amazon will leave Europe because we will have digital taxation," Mr Macron said.
“I believe that in the long term they will destroy all the actors who are their European competitors if we do not create a level playing field. So we must create a European and homogeneous fiscality. It will impede certain actions that have played on division.”
Mr Macron referred to Ireland’s low corporate tax regime, suggesting that taxes should be raised in line with those across Europe.
“So when one has a fiscal regime that is abnormally low, it should be raised a little. This is part of the harmonisation that I mention when I speak of Europe. Our unity, our sovereignty, depend on greater harmonisation on these subjects,” he said.
Collective negotiations
The French leader drew parallels between the importance of collective negotiations in the talks on the United Kingdom's exit from the European Union and on EU-wide taxation of tech multinationals.
“Each one [government] thinks they have an interest in negotiating on their own. They think they negotiate better than their neighbour. If we do that, it is probable that we will create a situation that is unfavourable to the European Union and thus to each one of us,” he said.
The French government is confident that the EU Commission will take up Mr Macron's proposals, which are backed by Germany, Italy and Spain, after a public consultation on proposals to tax the digital economy better ends this month.
The Irish Government believes the tax issue should be addressed globally and not at a European level.
Dublin is awaiting a report on international tax proposals under the so-called Base Erosion and Profit Shifting, or Beps, project to be issued by the Organisation for Economic Cooperation and Development, the Paris-based liberal economic think tank.
Mr Macron has secured the presidency of the OECD ministerial Council for France for the first semester of 2018 ensuring that the French view will be strongly represented.
