Ireland's finance chief is still optimistic on a digital tax deal despite US backlash

  • The United States shocked European nations earlier this month when it pulled out of international negotiations over such a tax.
  • The United States has been a fierce opponent of plans to make digital giants pay more in taxes, as the majority of these firms are American. It is the White House's view that digital taxes are unfair toward U.S. companies.
  • But Paschal Donohoe, the Irish minister of finance, told CNBC Wednesday: "I am actually optimistic about our ability to make progress on this inside the OECD."

It may have been the cause of some serious tension between the U.S. and Europe, but the Irish finance minister believes an international deal on a digital tax is still possible.

The United States shocked European nations earlier this month when it pulled out of international negotiations over such a tax. Both sides of the Atlantic had been at odds over plans in certain European capitals to tax technology giants more, but decided to take their differences to the Organization for Economic Cooperation and Development (OECD) in search of a compromise. The latest U.S. move to leave the talks eroded any hopes for a quick deal.

But Paschal Donohoe, the Irish minister of finance, told CNBC Wednesday: "I am actually optimistic about our ability to make progress on this inside the OECD."

"I think we need to view what is happening inside the OECD at the moment as a pause, that is happening for many different reasons, but I think it will be possible later on in the year or maybe early next year to make progress inside the OECD," he said.

Ireland was one of the few countries voting against an EU-wide digital tax back in 2018, pushing for a broader agreement with other nations beyond the European level. Ireland hosts some large tech firms, which have headquarters there. In addition, the country was asked back in 2016 by European authorities to recoup 13 billion euros in unpaid taxes from Apple. Apple and the Irish government appealed that decision.

The United States has been a fierce opponent of plans to make digital giants pay more in taxes, as the majority of these firms are American. It is the White House's view that digital taxes are unfair toward U.S. companies.

Speaking to CNBC, Donohoe said: "I think it is important that we change how we tax digital companies," while also describing a "genuine concern" over the implications of making changes in this field.

New Eurogroup President 

Donohoe is looking to get a more prominent role in European politics, having thrown his hat in the ring to become the next chair of the Eurogroup, a regular gathering that brings the 19 finance ministers of the euro area together.

Ahead of the vote next week, he told CNBC he still has some more convincing to do to get the majority of his colleagues behind his candidacy.

"The votes are not due to take place until the end of next week, but I have many assurances of support and I am very grateful for those assurances of support. I still have much work to do to gain more votes and to make the case for my candidacy," the finance minister said.

In a letter to his counterparts, he said it would be important to work toward restoring fiscal targets across the euro zone. European governments agreed back in March to scrap fiscal commitments for the time being to allow them to deal with the coronavirus crisis.

"It is not imminent," he told CNBC, "for now all of our focus has to be getting those jobs back, rebuilding income."

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