Brussels, 03/11/2015 (Agence Europe) - A year after the LuxLeaks scandal, which revealed hundreds of tax agreements entered into between multinational companies and Luxembourg, the NGOs are keeping the pressure to a maximum in the fight against aggressive tax planning and have made a very mixed inventory of international efforts made so far.
In a report published on Tuesday 3 November by the network Eurodad, with some 15 European associations and entitled 'Fifty shades of tax dodging', the only praise goes to the European Parliament, which has argued for and brought pressure to bear for the publication of tax rulings and country-by-country reporting. Readers will already be aware of the disappointment of the NGOs at the OECD's 'BEPS' (base erosion and profit shifting) project, which is explained in the report in greater detail.
The European Commission and the member states also come under fire. The Eurodad report is effectively a catalogue of the various stances taken.
“Now that the LuxLeaks scandal seems to be a distant a memory and the content of the Commission's measures is out in the open, we have to conclude that the vigourous rhetoric and new initiatives have failed to set in place the reforms necessary to respond to the scale of the problem: the very low number of new legislative initiatives is patent proof of this”, reads the report. Some of the NGOs' criticisms of the European Commission are already out in the open, particularly as regards the postponement of the 'consolidation' aspect of the proposed common consolidated corporate tax base, and the possibility of partial consolidation in the meantime. “Civil society has made clear that these proposals could create new legal gaps in the taxation system of the EU, therefore bringing with it a more aggressive tax planning and lower tax contributions from multinationals”, the report states.
The 'Moscovici' consolidated list of non-cooperative third countries does not get away unscathed. “The Commission has opted to use relatively arbitrary criteria to draw up this list, only including jurisdictions which have been put on the blacklists of at least 10 member states”, states the report, adding that no sanctions have been announced for the countries on the list.
“Possibly even more worryingly, the list does not include any of the many EU jurisdictions which play an essential role in the tax planning strategies of multinational businesses. However, it does include developing countries such as Liberia, which play only a marginal role in the international financial and offshore system”, the report states.
The report also looks at 'patent boxes', tax schemes which favour the patent, and refers to a November 2014 study by the Commission which “seriously called into question the effectiveness of the patent boxes, showing that they were used for aggressive tax planning purposes” and that, far from stimulating innovation, they “seem to do more to favour transfers of companies' profits”. Several months ago, the Commission's competition services started to gather information on these schemes, but interrupted their work in light of the German-British compromise on this point. Basically, this compromise states that there is a need to guarantee that businesses enjoying a tax advantage have genuine economic activities, by virtue of the 'modified nexus' approach. On this point, the Commission has decided to give the states the benefit of the doubt, but warned that if they do not comply with this new approach within 12 months (from June 2015), it would prepare binding legislative measures to ensure that they do.
The report also puts into perspective the investigations of the Commission's competition services on the tax rulings. Between 1994 and 2012, 65 state aid investigations related to tax issues were opened, including just two between 2007 and 2012 and 45 between 1998 and 2002. “Against this backdrop, it is clear that the recent opening of six investigations (…) is a welcome improvement, but when this figure is compared to what was possible in the early 2000s, we see that it is not particularly ambitious”, states the report.
The document is particularly damning of France and Germany's positions on tax transparency. It studied the positions of 15 EU member states on country-by-country reporting and notes, amongst other things, that Slovenia has implemented the CRD IV directive, but not the specific provision requiring the banks to carry out public reporting. Sweden, Germany, Spain, France, Ireland, Luxembourg, Poland and the United Kingdom will implement the OECD model, in other words confidential reporting to the tax administrations. The Italian, Czech, Hungarian and Belgian positions are not yet known and Denmark's remains to be clarified. The Netherlands is a specific case, due to a parliamentary resolution calling for public reporting and support expressed to this effect by the government in a letter to the European Commission, although there is a public commitment to implement the OECD standard. The report also clarifies how many listed companies would have to supply this reporting under the OECD threshold and under that of the EP. In the lead is the United Kingdom, with 778 companies according to the EP threshold and 262 under that of the OECD, followed by Germany, with 442 companies (compared to 132), and France, with 418 (as against 154).
In an open letter published by Libération, several members of the European Parliament, the economists Thomas Piketty and Jean-Paul Fitoussi and the former President of the European Commission, Romano Prodi, urge the states to support public reporting in the form included by the EP in its negotiating position on the revision of the 'shareholders' rights' directive. (Original version in French by Elodie Lamer)