Macron Has Some Tough Questions for Irish Leader on Taxing Apple

Updated on
  • Varadkar visits Paris for meeting with president Tuesday
  • French officials say Macron to discuss plan for EU tax reform

Irish Prime Minister Leo Varadkar went to Paris Tuesday to discuss the outlook for Brexit negotiations. He also faced some awkward questions on corporate taxes.

The Irish government is one of the main obstacles to French President Emmanuel Macron’s plan to harmonize corporate taxes across different European Union states. Additionally, the French have suggested a new levy for giant internet companies like Amazon.com and Facebook Inc. to force them to pay more in the large economies where they generate much of their revenue.

Macron and Varadkar on Oct. 24.

Photographer: Philippe Lopez/AFP via Getty Images

Ireland is opposed to any European move to overhaul taxes on internet companies, or more broadly to harmonize corporate taxes. Separately, Ireland and Apple Inc. are appealing a ruling by the European Commission last year that the iPhone maker should pay some 13 billion euros ($15 billion) in back taxes to the Irish Treasury.

Ahead of the meeting, Varadkar’s advisers said the agenda would include discussion on EU reform and new energy infrastructure between their two countries, without mentioning taxes. Macron’s office said the tax issue would come up, and it did.

“We are willing to discuss issues where we don’t necessarily agree, such as how to best tax internet firms so they pay their fair share,” Varadkar said after the meeting. “We remain convinced as a country that the best way to achieve a successful outcome is to support the work underway at the OECD.”

OECD Plan

The Organization for Economic Cooperation and Development is working on guidelines on how best to tax digital multinationals and EU leaders last week agreed to wait for the outcome of these talks, but also asked the European Commission to come up with interim proposals should the OECD’s work drag on.

“Our discussion on taxes is not completed and we’re working together for an accord in the interest of our countries and the EU,” Macron said. “I don’t believe in sterile positions. I see better ways to advance.”

The leaders in their late 30s both took power this year. They already held face-to-face talks at EU summits in June and October and French Finance Minister Bruno Le Maire shared his plans with his Irish counterpart at ministerial meetings in Luxembourg and Tallin, Estonia. Traditional tax systems have failed to capture revenue from the internet giants that emerged over the past 15 years because their limited physical infrastructure makes it easier to shift profits to lower tax centers such as Dublin.

Still, after a summer of campaigning for a new fiscal regime for Google, Apple, Facebook and Amazon, the French leader is softening his tone on measures that need unanimous support from EU members to take effect. Summit conclusions in October made no reference to new levies on the industry and Macron has signaled he’s happy to let the OECD take the lead on developing “an effective and fair taxation system fit for the digital era.”

The Commission has set itself the task of finding a formula that will satisfy leaders like Macron as well as those concerned about driving businesses away. Commission President Jean-Claude Juncker said his officials will propose a new set of rules for taxing tech companies in the first half of next year.

Brexit Progress

On Brexit, the Irish leader last week welcomed “some progress” from the British government but called on Prime Minister Theresa May to provide more detail on how she plans to avoid a physical border with the Irish republic. Tuesday, Macron said it was up to Britain to find ways to minimize the impact of Brexit on the border between Ireland and Northern Ireland.

On the Mercosur trade talks with South American countries, Varadkar said they both agreed to protect the interests of their beef and other farming producers.

— With assistance by Dara Doyle

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