Zara scandal shows tax dodging still in fashion, says Oxfam

Published: 8th December 2016

Reacting to a report published by the Greens/European Free Alliance today, which reveals that Inditex, owners of the global fashion retailer Zara, avoided paying €585 million in taxes in Europe between 2011 and 2014, Susana Ruiz, Head of Tax policy for Oxfam said:

“Corporate tax dodging is still in fashion and it’s the poorest people in society who pay the price – their tax bills are increased and the health and education services they rely on are cut as governments try to compensate for falling corporate tax revenues.”

The same kinds of tax avoidance strategies used by Zara in Europe are used by multinationals to dodge taxes across the globe.  The world’s poorest countries are hit hardest. For example Bangladesh, one of the countries that Zara sources its clothes from, loses $310 million a year as a result of just one form of corporate profit shifting [1]. This is equivalent to around one-fifth of the country's primary education budget; vital resources in a country where there is only one teacher for every 75 primary school-aged children [2].

“Europe must beef up its tax reforms to stop the scandals. Europe’s politicians must work together, and with governments across the world, to put an end to the tax loopholes and fierce tax competition that companies like Zara exploit. They must also ensure all multinational companies publish financial reports for every country where they operate so it’s clear if they are paying their fair share of tax where they do business.” 

Notes to editors

The Greens/European Free Alliance report found that Inditex used profit shifting strategies facilitated by the Netherlands, Ireland and Switzerland to avoid € 585 million in taxes between 2011 and 2014. Just one of Inditex’s profit shifting strategies, involving the payment of royalties to a Dutch subsidiary, cost Spain an estimated €218 million in unpaid taxes, Italy €57 million, France €76 million, Greece €20 million, Austria €6 million, Germany €25 million, UK €22 million and Belgium €18 million.

[1] Profit shifting is the practice of artificially moving profits from jurisdictions that have high taxes to tax havens or tax friendly jurisdictions.

[2] Bangladesh statistic is from 'Business Amongst Friends', Oxfam, May 2014 

Oxfam is calling for all governments to work together to stop tax dodging and the race to the bottom on corporate tax by

  • Stopping unfair and unproductive tax incentives and by working together to set corporate tax at a level that is fair, progressive and contributes to the collective good
  • Ensuring tax blacklists are based on objective, comprehensive criteria including whether or not a country offers zero rates of corporate tax;
  • Improving tax transparency by requiring all multinational companies to publish financial reports for every country in which they operate, so it is clear what taxes companies are paying and where. 

Contact information

Anna Ratcliff, or +447796993288

For updates, please follow @Oxfam.