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Company hearings in European Parliament: finally they testify, but it’s time for clear rules on transparency
Oxfam is pleased that several multinational companies attended a hearing in front of the European Parliament’s TAXE committee on Monday. The firms had initially refused to do so.
Oxfam’s EU policy advisor for inequality and taxation, Aurore Chardonnet, said:
“Companies decided to show up thanks to growing public and political pressure. This indicates they are starting to realize they will no longer get away with secretive tax deals and that transparency in business is the way forward. Opinion polls show that the vast majority of European citizens are in favor of tougher rules on tax avoidance and tax havens.
“Developing countries lose at least $100 billion in corporate taxes due to tax dodging -resources that are desperately needed for development.
“We can’t depend on voluntary initiatives by companies when it comes to transparency. Clear regulations are needed to create a level playing field, to achieve more transparency on tax rulings and to ensure the public knows where companies make profit and where they pay their taxes. Public country-by-country reporting, as it is called in tax jargon, would require multinational companies to publish exactly this information. We call on EU member states to adopt these rules, which are already supported by the European Parliament.”
Today, 11 large companies testified at a hearing in the European Parliament. Representatives of the firms appeared in front of the so-called TAXE committee, set up in response to wide-spread tax dodging as revealed by the Luxleaks scandal one year ago.
The “Committee on tax rulings, and other measures similar in nature or effect” is tasked to investigate harmful tax practices implemented by companies aiming at avoiding taxes and to make relevant proposals to respond to massive tax avoidance schemes.The committee has only limited powersdue to lack of political support for setting up a proper committee of enquiry.
The TAXE Committee has since its creation in February 2015 been very pro-active. It has performed investigating visits in the Netherlands, Ireland, Luxembourg, the United Kingdom and Switzerland as well as numerous hearings of tax experts and relevant stakeholders.
In June 2015, the TAXE Committee invited the companies accused of the most aggressive tax planning schemes to testify. After most companies declined, several Members of the European Parliament suggested to ban these enterprises from holding meetings with them or related political groups. In response to public pressure, companies in the end accepted to appear in front of the committee.
The report of the TAXE Committee lists results of investigations as well as recommendations. It was voted on October 26 in Committee and is expected to be adopted by the end of November 2015. The report recommends enhanced cooperation and coordination by Member States on tax issues, including tax rulings, a compulsory Common Consolidated Corporate Tax Base (CCCTB), state aid rules, transparency, public country-by-country reporting, tax advisers, protection of whistle-blowers and third country dimensions.
The European Commission in 2013 launched investigations into the tax schemes operated by large multinationals across Europe. On 21 October 2015, it concluded that Luxembourg and the Netherlands had granted selective tax advantages respectively to Fiat and to Starbucks. In her speech, Commissioner Vestager called for a fundamental shift in corporate philosophies.
In March 2015, Oxfam published a briefing note “Pulling the Plug – How to stop corporate tax dodging in Europe and beyond” that explores some of the solutions for fighting corporate tax avoidance in the European Union and explains why it is important for the EU to adopt them as soon as possible.
The “World Investment Report” of the United Nations Conference on Trade and Development (UNCTAD) estimates that developing countries lose at least $100 million per year in corporate tax revenue due to tax dodging by large companies.