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Disappointment as European Commission fails to address tax dodging

Added 17 Jun 2015

New Corporate Tax Package opens up new opportunities for corporate tax speculation and lower tax payments

 

Wednesday June 17 2015

 

Eurodad today expressed disappointment at the European Commission’s new corporate tax package which failed to take tough decisions that will help bring an end to tax dodging.  

 

The package, announced by Commissioner Moscovici, fails to take the logical step of consolidating the profits of transnational companies across European countries, postponing a decision on this indefinitely.

 

Instead, the Commission has indicated that the proposal for a common tax base will include a new system in which transnational corporations can use a loss in one member state to compensate for a profit made in another member state.  

Tove Maria Ryding, Tax Justice Coordinator at the European Network on Debt and Development, said: “It seems that the European Commission wants to postpone Christmas but make sure that big business gets its presents now. The option of offsetting profits in one country with losses made in another country could create a whole new playing field for tax speculation and lower tax payments. For a package that was meant to address the low tax payments of transnational companies this is highly worrying. It also means multinational corporations will now have even more privileges that are not available to national small and medium enterprises.”

 

The European Commission has given itself 18 months to come up with the initial proposal for a common tax base, which it calls the first step. There is no deadline for the second logical step – the consolidation of the profits - but it is clearly not likely to happen any time soon.

 

Transparency around multinational corporations’ tax payments still missing

The European Commission also failed to take any decisions on tax transparency, opting instead to announce another public consultation on country by country reporting.

 

Ryding said: “We won't be able to see the real impacts of this package as long as we're not allowed to see what multinationals make in profit and what they pay in taxes. That's why we need public country by country reporting.

“It’s absurd to see the European Commission launch another public consultation. It was the loud public outcry that forced the Commission to promise action in the first place, and now they are clearly just trying to find excuses to delay.”

 

Blacklisting of ‘tax havens’ leaves out some big offenders in EU’s backyard

The European Commission also launched a blacklist with 30 countries they consider to be tax havens.

 

Ryding said: “With this list the Commission is pointing fingers at small developing countries such as Liberia, which is clearly not among the worse sinners in the offshore world. Meanwhile they have left out several of the big problems in the EU’s own backyard, including Luxembourg, Ireland and the Netherlands. The list is concerning as it indicates that the Commission has still not grasped the role that certain jurisdictions in the EU have in undermining the tax base of the developing countries that they are now pointing their fingers at.”

 

ENDS

For more information please contact Julia Ravenscroft, Communications Manager at Eurodad, on jravenscroft@eurodad.org + 32 2 893 0854.

 

Notes to the editor:


· Late last year a public hearing and an impact assessment about public country by country for banks. These showed that public country by country reporting would have either no or slightly positive impacts on the economy, and that even before the LuxLeaks there was strong support for public country by country reporting.


· The need for public CBCR was demonstrated just today when a new report on Walmart's tax practices published (http://www.americansfortaxfairness.org/walmart-tax-havens). The report shows that it has 22 shell companies in Luxembourg that paid less than 1 percent of tax on USD 1.3 bn of profits, and holds more than USD 64 bn in assets. Despite the importance of the Luxembourg subsidiaries for Walmart’s business model they are not mentioned once in Walmart's annual report (http://stock.walmart.com/files/doc_financials/2014/Annual/2014-annual-report.pdf). Had we had public country by country reporting this would have been immediately clear.