European Parliament takes important step to end tax dodging

Today the European Parliament voted in favor of specific recommendations aimed at stopping corporate tax avoidance across the European Union. The plenary adopted the report of its special committee on tax rulings, which had been created after the Luxleaks scandal. Oxfam welcomes the parliament's broad consensus on ending corporate tax abuses and working towards restoring the trust of citizens in the tax system.

Oxfam’s EU Policy Advisor on Inequality and Taxation, Aurore Chardonnet, said:

“The TAXE committee has realized the scale of corporate tax dodging as revenue losses could amount to around €160-190 billion in the EU each year. This has social impacts in terms of job losses and cuts in social investment. With eight out of every ten Europeans supporting changes in laws to clamp down on the use of tax havens, it is clear EU citizens are tired of seeing large multinational companies escape their tax duties.

“If we want to stop companies from easily shifting their profits to low tax jurisdictions, we need to know where the money goes. A first step towards transparency would be public country-by-country reporting. That means a change in reporting standards requiring multinational corporations to publicly reveal in which countries they make their profits, where and how much they pay in taxes. The European Parliament has now, for the third time this year, stood up for this to become law. Today’s vote builds on the existing proposal for the Shareholders’ Rights Directive as amended by the European Parliament.

“Profit-shifting has a devastating effect on developing countries. The world’s poorest states lose more than $100 billion a year in corporate income tax due to profit-shifting by multinational companies, as the TAXE report highlights.

“Tax must remain central to the EU’s political agenda. This is why Oxfam supports the extension of the committee’s mandate and suggests its conversion into a permanent sub-committee. The upcoming proposals of the European Commission on tax regulation can only benefit from the Parliament’s input.”

Notes to editors: 
  • The “Committee on tax rulings, and other measures similar in nature or effect” (TAXE Committee) was set up in February 2015 following the Luxleaks scandal, which exposed large-scale tax avoidance practices of some of the biggest global corporations in several EU member states. The committee has been tasked to investigate harmful tax practices used by companies aiming to avoid taxes, and to make proposals to respond to large-scale tax avoidance schemes.
  • The TAXE Committee has been very pro-active since its inception in February 2015. It has undertaken investigation trips to the Netherlands, Ireland, Luxembourg, the United Kingdom and Switzerland, and conducted numerous hearings with 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 ultimately appeared in front of the committee – on 16 November, 11 large companies testified at a committee hearing.
  • The report of the TAXE Committee lists results of investigations and recommends enhanced cooperation and coordination by Member States on tax issues, including tax rulings, a compulsory Common Consolidated Corporate Tax Base (CCCTB), public country-by-country reporting, protection of whistle-blowers and third country dimensions.
  • Eight of ten Europeans say laws need to change to clamp down on the use of tax havens, a poll produced on behalf of the ‘Tax Justice Together’ project shows. Over half of all respondents also say that tax avoidance of large companies drains funding for services such as education and health care in poor countries.
  • In March 2015, Oxfam published “Pulling the Plug – How to stop corporate tax dodging in Europe and beyond”, a briefing note that explores some of the ways to fight corporate tax avoidance in the European Union and explains why it is vital for the EU to adopt legislation against tax dodging 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.
Contact information: 

Florian Oel, florian.oel@oxfaminternational.org, mobile +32 473 56 22 60

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