Proposals in the Organisation for Economic Co-operation and Development (OECD) discussion draft on digital taxation, that would change the way high-tech multinational companies are taxed, will only benefit large countries with large markets, Chartered Accountants Ireland has said.

Reacting to the OECD discussion draft, Chartered Accountants Ireland Tax Director Brian Keegan warned that the plans would “fundamentally change the business model for companies based in Ireland.” Keegan is concerned that the OECD would “move company profits away from where value is created, in countries like Ireland, to locations where products are sold – principally the major European countries.” Chartered Accountants Ireland believes that this would be similar to taxing a country’s agriculture exports where they are sold, rather than where they are grown.

Irish exports in the information and communication technologies sector represent 12.7 percent of the world market. Ireland could therefore be the biggest loser in terms of its corporate tax take, Keegan said. He urged Irish businesses to engage with the consultation process, “and point out the flaws in the OECD reasoning.”

The OECD’s discussion draft on the Tax Challenges of the Digital Economy has been released as part of its broader Base Erosion and Profit Shifting (BEPS) project. The document identifies four main policy challenges relating to taxpayer location, the taxation of data, classifying supplies, and value-added tax (VAT) collection.

“We need the commercial point of view to be fed into these proposals before they become concrete to the detriment of Irish business and Irish taxpayers generally,” Keegan stressed.