Eurodad comment on the “LuxLetters scandal”

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Today, a new international tax scandal known as LuxLetters was revealed by Le Monde, Die Süddeutsche Zeitung, El Mundo, Woxx and Investigative Reporting Project, in cooperation with Tax Justice Network and The Signals Network. 

In response to the revelations, Tove Maria Ryding, Tax Coordinator at the European Network on Debt and Development (Eurodad), said: 

“The LuxLetters scandal gives us another peek into the murky world of corporate tax havens and, unfortunately, the picture is sadly familiar. It is quite common for tax havens to respond to international tax scandals and outcries by replacing one harmful tax practice with another. For years, we have heard rumors about how formal tax rulings have been replaced by informal tax deals between the authorities and multinational corporations in Luxembourg. The LuxLetters scandal seems to suggest that these rumors are true. 

“It is not as such surprising that Luxembourg has continued its harmful tax activities. But it is surprising that the rest of the world’s governments continue to accept this – especially in light of the Covid-19 crisis, which has created a desperate need for tax income to finance healthcare and recovery. Given that corporate tax avoidance is costing countries billions of Euros in lost tax income every year, one wonders how many of these scandals it will take before our governments find the political ambition needed to replace the failed global corporate tax system. 

“If we had clear, fair, transparent and simple international tax rules, it would not be possible for tax havens and corporations to make secret deals which allow them to game the system. The fundamental problem is that the corporate tax rules, and in particular the transfer pricing system, are so unclear that much is left to discretion. 

“Right now, the OECD is leading a process to rewrite the global tax rules. A coalition of developing countries has proposed some fundamental changes to the system, but unfortunately, these suggestions have been largely ignored in the negotiations. Instead, focus has been on different types of unambitious sticking-plaster solutions, including a global minimum tax rate as low as 15 per cent. At the same time, the EU recently failed to agree effective rules to let citizens see how much corporations are really paying in tax in each country where they operate. 

“The Luxletters scandal is a stark reminder of why we need a much more ambitious overhaul of the corporate tax system.”

ENDS

Media contact: Julia Ravenscroft, Communications Manager, Eurodad: [email protected]/ +32 486356814. 

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