The European Commission recently published its long-awaited BEFIT (Business in Europe: Framework for Income Taxation) proposal for the taxation of large multinational companies.
It follows a long-term effort to introduce group taxation with a formula for allocating taxable profits where value is created (in terms of payroll, number of employees, assets). This was the intended objective of the CCTB and CCCTB proposals, which have now been withdrawn from the European agenda.
The ETUC has consistently called for an end to profit shifting to low-tax jurisdictions through transfer pricing. Countries where value is created must be able to receive their fair share of tax revenues.
This BEFIT initiative, on the other hand, gives multinationals a free pass to continue shifting profits to EU tax havens for at least another decade. While the European Commission proposes to achieve some harmonisation of the rules for calculating the tax base by 2028, it also gives itself until 2031 before considering the introduction of formulary apportionment.
This follows a very disappointing set of mandatory country-by-country public reporting requirements for large multinationals. While they will have to provide information on their activities in each Member State and jurisdiction on the EU's list of non-cooperative jurisdictions, they will be able to report aggregated figures for the rest of the world. A European Court of Justice ruling also invalidated a requirement for public registers of beneficial owners of companies, trusts and similar legal structures.
With these inadequate measures, the European Union is failing in the fight for transparency and against tax avoidance. With inflation largely driven by corporate profits and austerity looming, working people cannot wait another decade for the European Union to lead the fight against corporate greed. The ETUC will work with the EU institutions to radically transform the BEFIT initiative so that no more time is lost.