As government aid to companies hit by the Covid-19 crisis multiplies, there are growing calls for it to be accompanied by tax transparency. On Tuesday 28 April, it was the Tax Justice Network’s turn to warn that the European economy cannot be rebuilt “on top of a tax haven trapdoor”.
Denmark, Poland and France (see EUROPE 12473/33) have announced in recent weeks that they will not grant economic aid to companies based or having subsidiaries in tax havens. While not all of these countries have detailed their intentions, it would appear, according to the organisation, that their moves are based on the EU’s ‘black’ list of non-cooperative jurisdictions, which excludes European tax havens.
According to a new report by the Tax Justice Network, the EU loses more than $27.6 billion a year in corporate taxes from US companies that, instead of declaring their profits in the EU countries where they were generated, prefer to shift their profits to the “axis of tax avoidance”, i.e. the UK, Switzerland, Luxembourg and the Netherlands, where tax rates are lower.
“Now more than ever, EU countries must reprogramme their tax systems to prioritise people’s wellbeing over the interests of the wealthiest corporations”, said the organisation’s chief executive, Alex Cobham.
To this end, the report recommends three actions: - the long-awaited adoption of the Common Consolidated Corporate Tax Base; - the setting of a minimum effective corporate tax rate of at least 25%; - the adoption of the proposal for country-by-country tax transparency, which would oblige companies to make public certain accounting data such as their revenues and taxes paid (see EUROPE 12384/3).
“These steps, taken together, would end the corporate tax havenry of the axis of tax avoidance, would raise important new revenues for all EU members to support their Covid-19 responses and, beyond that, would establish the basis for accountable corporate tax sovereignty long into the future”, the Tax Justice Network believes.
See the study: https://bit.ly/2y8r0ID (Original version in French by Marion Fontana)