EU governments block anti-tax dodging measures
Reacting to EU finance ministers’ failure to agree on new measures against corporate tax dodging, Oxfam EU Policy Advisor on Inequality and Taxation, Aurore Chardonnet, said:
“It was mainly EU member states with very low corporate tax rates that blocked new measures against tax dodging by multinational companies. The initial proposal was already weak, but governments tried to water it down even further. Despite repeated scandals like the Panama Papers, Luxleaks or Offshoreleaks which demand immediate and efficient action, it is unlikely that we will see a meaningful commitment against tax dodging when finance ministers reconvene in June.
“What is really needed are straightforward and easy to implement rules that target companies’ subsidiaries in tax havens. Member states should not be given too much leeway when it comes to the implementation of such measures known as CFC rules. Otherwise, it will be impossible to prevent companies from shifting their profits into tax havens.
Extreme economic inequality, which is exacerbated by tax dodging, means plenty of spoils for a few people and poverty for many. This is a denial of the rights of millions of people and why Oxfam is calling for an end to the era of tax havens.”
- Oxfam fights for global tax justice because companies, like all of us, must pay their fair share of tax. Tax revenues are needed to support essential public services, including health care and education, both in developed and in developing countries.
- Controlled Foreign Company (CFC) rules are a crucial measure against profit shifting into low-tax jurisdictions. If the income of a company’s subsidiary abroad is taxed at a low effective rate or not taxed at all, then CFC rules apply and the tax authority of the company’s home country taxes the income of the foreign subsidiary. The main aim of CFC rules is to discourage profit shifting to tax havens which should benefit both developed and developing countries.
- On May 23, Oxfam released “The Netherlands: a tax haven”, an analysis of European Commission data showing the Netherlands is a top EU tax haven for corporations. Of 33 harmful tax practices listed by the Commission, 17 were identified in the country currently holding the EU presidency.
- In March 2015, Oxfam published “Pulling the Plug – How to stop corporate tax dodging in Europe and beyond”, a briefing note that explores ways to fight corporate tax avoidance in the European Union. It explains why it is vital for the EU to adopt legislation against tax dodging as soon as possible.
- In December 2015 and ahead of the publication of the Anti-tax avoidance directive by the European Commission, Oxfam, together with ActionAid and the EPSU, sent a letter to the Director-General for Taxation and Customs Union of the European Commission. The document outlines the organizations' position and demands regarding corporate tax avoidance and an external strategy of the EU on tax good governance.
- The “World Investment Report” of the United Nations Conference on Trade and Development (UNCTAD) estimates that developing countries lose at least US$100 billion per year in corporate tax revenue due to tax dodging by large companies.
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