MEPs: Name firms that use tax havens

A European Parliament report says multinationals that use tax havens should be named, and also banned from receiving state aid.

Multinationals that use tax havens and aggressively cut their tax liability should be named, shamed and disadvantaged, the European Parliament’s investigation into the LuxLeaks said.

The report follows on from weeks of hearing evidence from tax experts, companies and national interests earlier in the year and outlines laws the parliament will demand from the European Commission.

The conclusions, due to be voted on by MEPs in December, want a much tougher attitude towards such companies, and more stringent controls over the tax policy of member states.

Junior finance minister Simon Harris gave the report’s recommendations a very cool reception, making it clear the Government was more interested in a more global approach and was waiting for the OECD reports due out next month.

However, the report will add to the pressure on Ireland’s tax structure ahead of a ruling expected shortly from the commission’s competition arm over tax breaks given to Apple.

The revelations that nearly 340 multinationals did secret deals with Luxembourg allowing them slash their global tax bills to less than 1% while having little or no economic activity in the country caused outrage, and led to revelations about similar deals in other countries including Ireland. 

They reckon that revenue losses to member states could be as high as €190bn a year because of the special tax arrangements and inefficient collection.

The report wants counter-measures against companies that make use of tax havens — a call first made in the parliament’s annual tax report last year, but now backed up with more detail about how this should be done. 

This would include banning these companies from receiving state aid, EU funds including agriculture, cheap loans from the European Investment Bank, or getting public procurement contracts.

The report suggests giving a “Fair Tax Payer” label to companies that are fully tax compliant that would also feed into public awareness of the issue, and ask that the EU publish an estimate of the ‘missing tax’ in each country as a result of inefficiencies and avoidance.

On the vexed issue of profit shifting between different entities within the same group — a major complaint against Ireland by other countries and Germany especially — the report calls for more precise rules that those currently in use.

It acknowledges that the OECD/G20 BEPS report will produce principles to deal with this, but warns they could still be too broad to address the problem, and wants the EU to go further.

The report says that the EU should not stop at trying to stem losses from corporate tax evasion but should also consider individual tax as well including collection and Vat, and questions tax-amnesties and non-transparent tax forgiveness schemes.

Member states making any changes to their personal and corporate tax systems should inform the rest of the EU; an EU wide tax identity number should be introduced; they support making the planned common EU corporate tax base compulsory and introducing the extended consolidated version by the end of 2017.

They advocate a new approach to international tax arrangements with the commission negotiating with third countries on behalf of the entire EU and say a common multilateral double tax agreement should replace bilateral agreements.


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