Tax reform is key alongside MNC probes, says Oxfam, as Brussels investigates McDonald’s

The European Commission today opened a state aid probe into the tax deal between Luxembourg and the US fast-food chain McDonald’s. This is the latest in a string of investigations, and follows recent rulings on illegal state aid deals between the Dutch government and Starbucks, as well as Luxembourg and Fiat. Investigations concerning Apple’s tax deal with Ireland and Amazon’s deal with Luxembourg are ongoing.

Oxfam International’s Inequality and Taxation EU policy advisor, Aurore Chardonnet, said:

“We strongly support the efforts of Commissioner Margarethe Vestager to investigate secret deals between large multinationals and European governments.  Such harmful and unfair tax practices allow companies like Starbucks, Fiat, Amazon, Apple and now McDonald’s to pay minimal corporate tax. This leaves governments without the funds necessary for public services which are key to reducing inequality.

“This one-by-one approach though is not the way forward to countering wide-spread tax avoidance. The Luxleaks scandal revealed nearly 350 similar cases of corporate tax avoidance that still need to be looked at. A set of legislative reforms towards a fair tax system is what’s needed where multinational firms must be transparent about their financial operations and make this information public.

“Eight out of ten Europeans want new laws to clamp down on the use of tax havens –  European governments must deliver.”

Notes to editors: 
  • Tax rulings determine, in advance of intra-group transactions, the amount of tax to be paid by the company.  According to the European Commission, tax rulings may involve state aid within the meaning of EU rules if they are used to provide selective advantages to a specific company or group of companies.
  • Luxembourg is being investigated for tax rulings regarding Amazon and McDonald's; Ireland for tax rulings regarding Apple. On October 21 2015, the European Commission 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.
  • The European Commission presented a plan on 17 June 2015 for a fair corporate tax system in the European Union and is now undertaking an impact assessment to be released early next year on the benefits of country-by-country reporting following a 3-month public consultation. This reporting standard would require multinational companies to publicly reveal in which countries they make their profits, where and how much they pay in taxes.
  • On 12 February 2015 the European Parliament decided to set up a special committee on tax rulings (TAXE Committee) whose mandate has been renewed yesterday, 2 December 2015. The European Parliament has repeatedly called for greater transparency around the activities of multinational corporations and already voted four time this year in favour of country-by-country reporting.
  • 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.
  • 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.
Contact information: 

Florian Oel, eumedia@oxfaminternational.org, t +32 2 234 11 15, m +32 473 56 22 60

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