Large corporations, low taxes?

Multinationals can make it easy on themselves: They pay less and less corporate tax. In 2018 alone, Germany lost 9.5 billion euros in tax revenues, France even 11.5 billion euros. Even in Austria, the loss totals in one billion euro per year.

On average, Multinationals pay 30 % less corporate tax than local companies. The tax burden of the digital economy (9.5 %) is not even half the traditional economies’ tax burden (23.2 %). To put it simple: Multinationals shift almost 40 % of annual profits into low-tax countries and so called tax havens.

Why is that so? Still so called „tax heavens“ as well as member states try to attract companies through low rate of taxes and fiscal dumping. Coincidentally, tax avoidance strategies used by corporations are getting increasingly aggressive.

Devastating consequences for the general public

Tax avoidance and the harmful race to the bottom led to global losses up to 240 billion US-Dollar each year. The lost tax revenues must be compensated elsewhere. The tax burden shifts to an ever greater extent to employees and consumers. But also small and medium sized-enterprises (SMEs) have to make an increasingly larger contribution compared to global players Unless something changes quickly, it will become increasingly difficult to make public investments and secure important public expenditures.

COVID 19 makes matters worse

COVID-19 amplifies this imbalance: While global tax revenues nosedive in 2020, countries spend billions for bailouts. The multi-billion state aids need to be financed with additional funds. Additionally, Multinationals, due to their size, often benefit disproportionately from government aid programmes and in many cases even form the crisis itself (e.g. e-commerce or streaming services).

AK and ÖGB demand: Those rescued with taxpayers’ money, must pay their fair share!

With an effective uniform tax rate for corporations on a global scale, the worldwide annual corporate tax revenues could be increased by 4 %, which corresponds to 100 billion US-Dollar of budgetary surplus each year. A positive effect would be that additional revenues could be allocated approximately uniformly so that every country, except tax havens, would profit. As a consequence, employees and SMEs tax burden could be reduced greatly and still the additional tax revenues could be invested in better education and job creation.

Social Media Campaign „Make Multinationals Pay“

Just in time for the meeting of the OECD financial ministers at the 8th and 9th October 2020, AK EUROPA and the ÖGB Europabüro have launched the social media campaign „Make Multinationals Pay“. People who want to support the campaign can download the subjects and share them on social media platforms (e.g. twitter and facebook). In addition to the G20 convention by the end of October, another meeting will take place next week between G20 finance ministers and the governors of the central banks. In this meeting the taxation of multinationals shall be discussed as well. So now is the time to increase the pressure!

Further Information:

AK EUROPA Policy Brief: Digitalisation and Taxation

AK EUROPA: Commission presents new Tax Package

AK EUROPA: Digital tax: Multinational companies must be asked to pay up at last

AK EUROPA: Fair corporate taxation will also pay off for workers

A&W Blog: Taxation in, for and against Europe - How can the EU achieve a fair distribution of the tax burden?

A&W Blog: The OECD taxation plans - An important step in the right direction