Today, the European Commission launched its new proposal for tackling the debt-equity bias in taxation (DEBRA).

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

“In the current EU corporate tax rules there are loopholes related to corporate debt, and that is a big concern, both because it entails a risk of corporate tax avoidance, and because it creates incentives for corporations to rely on debt financing as opposed to equity financing. The obvious solution is to remove the tax loopholes related to debt financing. Unfortunately, the European Commission is instead suggesting the introduction of new tax incentives related to equity financing, which could potentially open up new avenues for corporate tax avoidance.

“We are in the midst of a very difficult economic situation and it has never been more urgent to repair our broken tax system, including by addressing large-scale corporate tax avoidance. This is not the time to introduce new corporate tax loopholes.

“When large corporations can dodge taxes, citizens are left with the bill in the form of more regressive taxes and austerity. Instead of looking at introducing new corporate tax loopholes, the EU should focus on making multinational corporations pay their share of tax. There are obvious measures that the EU can introduce. The first step should be to let the public see where corporations do business and how much they pay in tax in each country where they operate – so-called public country by country reporting.

“In addition to its own measures, the EU must also engage in the development of a truly global solution. The OECD-led negotiations on new global tax rules have failed to repair the global tax system, and instead resulted in new ineffective and unfair tax rules. The group of African countries at the United Nations are now calling for a new UN Convention on Tax, and a UN negotiation where all countries, including developing countries, are able to participate on an equal footing. It is time for the EU to support this call.”

ENDS

Media contact: Julia Ravenscroft, Communications Manager, Eurodad: [email protected]/ +44 7958 184 695.

Notes to editors:

• The press release and proposal from the European Commission can be found here.
• Eurodad and the Global Alliance for Tax Justice have launched a proposal for a UN Convention on Tax, which can be found here.
• In October 2021, an OECD-led international negotiation resulted in a political agreement on new corporate tax rules. A number of civil society organisations, including Eurodad and the Global Alliance for Tax Justice, have criticized the process for being non-inclusive, and the outcome for being ineffective and biased in favor of rich countries. You can read a joint reaction from Tax Justice Network and the Global Alliance for Tax Justice here, and the Eurodad reaction here