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Large-scale tax avoidance by Starbucks & Fiat: European Union must now act on tax dodging
Oxfam welcomes today’s decision by the European Commission that Fiat and Starbucks were receiving unfair state aid. The decision that Luxembourg and the Netherlands’ issued ‘comfort letters’ providing tax reductions to the companies, should be seen as the start, and not the end, of a process to stop such practices. Oxfam now urges the European Commission to launch a fully comprehensive investigation into the 350 cases of corporate tax avoidance revealed during last year’s LuxLeaks scandal.
Natalia Alonso, Oxfam’s Deputy Director of Advocacy & Campaigns said:
"It is high time that the European Union stood up to Starbucks, Fiat and other multinational corporations which are attempting to dodge paying their fair share in taxes and the Member States which help them. Companies like Starbucks and Fiat will continue to play the system unless the European Commission and Member States work together to close tax loopholes and punish those who break the rules."
“The work undertaken so far is a first step, but only with a full investigation can the European Commission start to restore European citizens’ trust in tax systems. The European Union must fight corporate tax dodging through legislative change and build a fair system that works for people and not just for giant corporations. At times of great inequality and suffering it is unacceptable that big business is not paying its fair share of taxes. The European Union can no longer avoid taking responsibility to put its house in order. ”
Oxfam expects the European Commission to levy heavy fines on those guilty of breaking European Union rules on state aid. Today’s announcement further underlines the importance of ensuring legal protection to those whistleblowers who took risks to reveal the systematic tax avoidance by giant corporations across the European Union.
“The European Union can also lead by example in making the transformative changes that are really needed. A clear definition and criteria for a tax haven list with the capacity to sanction and blacklist is necessary. And public country by country reporting will allow scrutiny on where corporate profits are made and where they should be taxed, providing a unique opportunity for European countries to demonstrate their will to fight tax avoidance.”
The European Commission in 2013 launched investigations into the tax schemes operated by Starbucks in the Netherlands and Fiat in Luxembourg.. Since the early 1990’s Fiat received significant tax reductions by way of "tax rulings" issued by the Luxembourg tax authorities, and Starbucks received the same by way "tax rulings" issued by the Dutch authorities. These determined, in advance of intra-group transactions, the amount of tax to be paid by the company.
After the LuxLeaks documents were made public by whistleblower Antoine Deltour on November 5 2014, tax rulings have been exposed as harmful tax practices that serve to permit tax avoidance. Luxembourg, the country at the heart of the LuxLeaks scandal, promised to make tax a priority at the start of its EU Presidency in July 2015.
Luxembourg is also being investigated for tax rulings made to Amazon. Ireland is being investigated for tax rulings made to Apple. The European Commission is considering opening an investigation into Luxembourg’s tax dealings with McDonalds.
Oxfam International released in March 2015 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 European Commission presented a plan on June 17 2015 for a fair corporate tax system in the European Union and is now preparing an impact assessment on the benefits of country-by-country reporting following a 3-month public consultation.
The European Parliament has repeatedly called for greater transparency around the activities of multinational corporations and on February 12 2015 decided to set up a special committee for an initial period of six months. The report of the special committee on tax rulings, and other measures similar in nature or effect, is expected by the end of November 2015.
Joanna Sullivan, tel 00 32 474 349 458 or email firstname.lastname@example.org
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