The European Commission has issued its new action plan entitled A fairer corporate tax system in the EU today. Europe's trade unions support a fairer and more efficient corporate tax regime addressing tax avoidance which is robbing society of billions of Euros to finance public services and social protection and to redistribute wealth and income. But the Commission’s plans lack clear actions.
The Commission states that companies must pay tax where they make profits and stop shifting profits to low tax regimes for example through intellectual property patent boxes. An important case was McDonald’s as the Unhappy Meal report of EPSU and others demonstrated and which triggered a preliminary investigation by the European Commission.
“The plan offers a good and clear diagnosis but no immediate prospect of a cure” said ETUC General Secretary Bernadette Ségol. “The Commission seems determined to put an end to corporate tax abuse yet two central measures of the plan, a mandatory common corporate consolidated tax base (CCCTB) and country by country reporting still need to be published. People expect actions as well as fine words.”
“Nurses, social carers, tax inspectors, firefighters will continue being told to tighten their belt due to lack of public cash while profitable transnational companies like Ikea, Google, Amazon, Starbucks, Fiat Finance and McDonald's pay less than 1% on astronomical profits”, said EPSU General Secretary Jan Willem Goudriaan. Why delay until end of 2016 a revised CCCTB that should indeed be mandatory for multinationals with a minimum tax rate of at least 25%? Doesn’t the Commission trust its own judgment on such a crucial issue of public concern? ”.
“The only concrete measure on the table is a common list of 30 tax havens, which we have been calling for to avoid competing national lists, but the proposal includes no deterring sanctions and makes no mention of notorious business-friendly tax regimes at the heart of the EU. The billions of hidden Euros will continue accumulating. ” said Bernadette Ségol.
“ Whilst 10% of the jobs in EU tax administrations have been axed since 2008, the one measure that could facilitate their work, public country by country reporting, is delayed despite all the evidence that it can work and must become reality now” added Mr Goudriaan.
For more information:
EPSU, Pablo Sanchez, firstname.lastname@example.org 0032 (0) 474626633
ETUC, Julian Scola, email@example.com 0032 (0) 486117394
Note to editors
- The action plan follows on European Commissioner Moscovici’s tax transparency package of last March including a draft directive for a compulsory exchange of information on tax rulings. It is part of the EC response to the Luxleaks revelations of last November.
- It proposes a mandatory CCCTB for multinationals, as called for by the European Parliament, the ETUC, EPSU and many tax justice groups. A revised proposal is to be published within 18 months. The proposed changes fail to include a common minimum tax rate of 25% – as called for by Parliament, EPSU and ETUC - that is slightly above the EU average nominal corporate tax rate and envisage a step by step approach that will postpone consolidation of accounts until a common tax base is agreed.
- Consolidated accounts means adding up all profits and losses of a company / group of companies from different MS, to arrive at a net profit or loss for the whole of its activity in the EU. This is what will determine the final taxable base of the company or group and will potentially limit complex transfer pricing in cross-border sales. It is a crucial aspect of the CCCTB to fully capture a company's cross-border activity within the EU. The Commission promises concrete tools to offset lack of consolidation.
- In line with the OECD/G20 backed BEPS (action plan against Base Erosion and Profit Shifting), the definition of a “permanent establishment” will be adjusted so that companies cannot artificially avoid having a taxable presence in MS where they make profits.
- Patent box: EC states it will continue providing guidance to MS on how to implement patent box regimes so that there is a direct link between the tax rebates and R&D; if within 12 months MS are not responsive, the Commission states it will draft legislation.
- A European list of 30 tax havens outside the EU without non-compliance sanctions. A common list is welcome but the absence of sanctions means that tax havens are likely to continue flourishing. Leaving out tax havens in the EU smacks of double standards. EPSU, ETUC and Parliament call for sanctions that target the users via a ban on public contracts.
- Extension of the mandate of EC good tax governance to review progress on new action plan, to determine a more strategic approach to controlling and auditing cross-border companies. The expert group consists of national tax administrations, business groups, NGOs and 2 trade unions including EPSU.
- The intergovernmental Business code of conduct that deals with harmful tax regimes is expected to be beefed up but there are no plans to make it accountable to Parliament.
- EC pending measure to improve double taxation dispute resolution mechanism- this has been much pushed for by business representatives at the EC good tax governance platform. There are concerns it may look like the infamous TTIP’s ISDS proposal.
- EC public consultation on corporate tax transparency including country by country reporting, deadline for response is 6 September.
- ETUC resolution tackling tax evasion and avoidance, 2015
- EPSU/SEIU/EFFAT/War on Want Unhappy meal, Mc Donald’s tax avoidance strategy, 2015 www.notaxfraud.eu
- EPSU report on impact of austerity in tax administrations in Europe, 2015 www.notaxfraud.eu