The chief executive of IDA Ireland has said it is hard to see how a digital tax makes sense.
Speaking to RTE News in Davos at the World Economic Forum annual meeting, Martin Shanahan said Ireland believes the issue should be dealt with on a multilateral basis through the OECD.
His comments came just hours after British Chancellor Sajid Javid signalled that the UK would introduce a digital tax in April.
France is also working on a common framework with the US to address the issue and prevent a trade dispute between the countries.
"Ireland has been extraordinarily consistent on this matter, we do not believe that there is on the one hand a digital economy and on the other hand the rest of the economy," Mr Shanahan said.
"We believe there is a digitised economy and for that reason it is difficult to see how a digital tax makes sense. Ireland's position is that this should be dealt with on a multilateral basis at the OECD. That is what is happening and now we have to wait and see what comes out of the OECD process."
In relation to signals given by Donald Trump in Davos that the US is prepared to escalate a trade war between the US and EU, the IDA boss said anything that impedes trade and slows investment is not good for Ireland.
Ireland is one of the most globalised economies in the world, he said, and a stable agreement across the globe about how trade should be done is needed.
I spoke to @martindshanahan from @idaireland in #Davos2020 today about what the agency was hoping to achieve there, whether not having a minister present would hinder its efforts, digital tax, trade wars, Brexit and climate change. #wef2020 pic.twitter.com/M7rBf5DCLT— Will Goodbody (@willgoodbody) January 22, 2020
Mr Shanahan also described the UK timeline for completion of a trade agreement with the EU by the end of the year as ambitious.
He said the fact there has been a conclusion to the first part of Brexit has provided some degree of relief for investors and short term stability.
But he added that although everyone says they are going to work towards an agreement by the end of the year, there is no question but it is ambitious.
Mr Shanahan said the IDA is in Davos because it is where the leadership of global companies are this week.
"It is a very efficient use of time, we get to meet both investors who are already invested in Ireland and check in with those and of course we are always looking for new potential investments," he said.
Ireland is not represented politically at Davos this year as the Taoiseach, Tanaiste and Minister for Finance decided not to travel because to the election.
"Obviously there is an understandable reason as to why the government isn't represented, but IDA as an agency and the state is here and we are doing all the things we would normally do," Mr Shanahan said.
"I will host a dinner for CEOs and senior leadership of the companies that we engage with tomorrow evening, we will be delivering Ireland's message to them. The bilateral meetings we would normally have are going ahead and they have been very useful so far."