Unambitious corporate tax proposal could lead to shortage of EU resources for Covid-19 recovery
Rather than an ambitious reform of the corporate tax rules, today's EU tax package is a Christmas present to all the multinational corporations that will be able to continue paying very low taxes.
Today, the European Commission presented its proposal to implement the minimum corporate tax rate, which was agreed in an OECD-led process in October 2021, as well as a plan for financing the EU’s Covid recovery.
In response to the proposals, Tove Maria Ryding, Tax Justice coordinator at the European Network on Debt and Development (Eurodad), said:
“We are in the midst of a global crisis, but unfortunately neither the EU nor the OECD have had the courage to propose a really ambitious reform of the corporate tax rules, which could have mobilised the billions needed to fill gaps in the budgets.
“Today’s EU tax package is a Christmas present to all the multinational corporations that will be able to continue paying very low taxes.”
In response to the European Commission’s proposal for a new minimum corporate tax rate, Ryding said:
“The proposed minimum effective tax rate is neither fair nor effective. Due to loopholes in the agreement, multinationals will still be able to pay less than the minimum tax rate of 15 per cent, which is already incredibly low.
“When governments fail to make big and wealthy multinational corporations pay their fair share of taxes, it is very bad news for ordinary citizens. We risk that governments will impose even more austerity, and at the same time try to raise additional resources through regressive taxes that impact disproportionately on the poorest.”
In response to the European Commission’s proposal for new own resources, Ryding said:
"In keeping with the OECD tax deal, both the EU itself and its Member States gave up on the idea of raising revenue from digital services taxes, so now everyone is looking for money elsewhere. The problem is that the OECD deal has a very narrow scope and a low level of ambition. Even if it were to enter into force, it will not be a gold mine of corporate tax income. Instead of discussing who gets a bit of extra corporate tax income from the OECD deal, both governments and the EU should urgently be looking at much more fundamental reforms to make big multinational corporations pay their fair share of tax.
“Some of the alternative sources of income that the European Commission is looking at, including the carbon border adjustment mechanism, can have significant negative impacts on the world’s poorest people and countries. We will not be able to find fair and effective ways to finance the Covid-19 recovery unless we make multinational corporations pay their fair share of tax. Unfortunately, the proposals that the European Commission tabled today are very far from the fair and ambitious solutions that we need.”
Notes to the editor:
- Proposal for a COUNCIL DIRECTIVE on ensuring a global minimum level of taxation for multinational groups in the Union: https://ec.europa.eu/taxation_customs/system/files/2021-12/COM_2021_823_1_EN_ACT_part1_v11.pdf