Taxing issue: multinationals respond to EP proposals to make them pay their fair share

€1 trillion a year: that’s how much tax evasion and tax avoidance is costing European tax payers every year, according to the European Commission. Parliament set up a special committee to investigate these practices in the wake of the Luxleaks scandals and came up with plans to ensure multinationals pay their fair share. Representatives of some of the world’s largest firms face the committee on 16 November to share their views on the proposals. Follow the meeting live online.

A tax system “unfit for purpose”

Jean-Claude Juncker, president of the European Commission, told the tax rulings committee that something needed to be done. “The current system of corporate tax rules is unfit for purpose and unjust. Some companies are losing out, whereas others win by hiding behind a variety of national rules,” he said at the committee’s September meeting. Juncker stressed that the fight against tax fraud and tax evasion was one of the Commission’s priorities.

In October the Commission found that tax arrangements offered by Luxembourg to Fiat and by the Netherlands to Starbucks constituted illegal state aid. Portuguese S&D member Elisa Ferreira, who helped to draft the committee’s recommendations, welcomed the decision, but warned: “These two cases have proven that tax competition among states to attract companies and profits is the norm in the EU.”

Proposals for a fairer tax system

After eight months of work, Parliament’s tax rulings committee adopted on 26 October its recommendations. Multinationals should pay their taxes where they make their profits, while competition between countries to offer corporations the lowest taxes is harmful, said MEPs.

Multinationals have their say

The tax rulings commitee is organising the meeting on 16 November to give multinationals the chance to comment on their proposals to make corporate taxation in Europe fairer and more transparent. The corporations attending include Amazon, Coca-Cola, IKEA and McDonald.

Although the committee had invited multinationals to share their views with MEPs from the very start of its work, many had declined. But after committee chair Alain Lamassoure, a French member of the EPP group, gave them one last chance, most of them reconsidered.

Exchange of information

German EPP member Markus Ferber, who wrote a report on the automatic exchange of tax rulings between member states, is convinced implementing this would go a long way in remedying the problem and dissuade member states from competing each other on taxes. However, MEPs regret that legislation on this was watered down by member states in the Council. “Why are member states clearly denying the Commission access to these data?” Ferber said. “Are they hiding something?”