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BackAs AK EUROPA has already reported, last year the Commission presented two Directives, as to how tax avoidance practices might be avoided - on the one hand based on the OECD Agreement on BEPS (Bode Erosion and Profit Shifting) and by an automatic exchange of information between the European Member States on the other. The reason for this initiative is aggressive tax practices by multinationals, which reduce their tax base with the help of tax oases. Well-known companies, such as Starbucks and Google, have already been ordered to make payments of tax arrears. Apple and Amazon are still under investigation. According to estimates of the Commission, the damage, caused by such tax avoidance practices is in the region of 1,000 billion euros. The Committee of the European Parliament in charge of this issue was to enable an informative exchange between Parliament and representatives of multinationals and those European countries, which the Commission rated as “non-cooperating states” last year. However, it became clear that the gulf between both sides is deep and that different opinions exist with regard to some issues.
Tax agreements and Exchange of information
The invited representatives of the corporations mentioned more than once that they would adhere to current EU rulings and that they would only apply legal tax incentives to benefit from tax breaks. Monaco, Liechtenstein and Andorra pointed out that because of the large number of bilateral agreements, transparency and exchange of information between other states would be promoted and that one had implemented EU laws to become part of the European internal market. Nevertheless, one would welcome a simpler, coherent and international set of rules. The OECD Agreement had been received positively. However, MEPs pointed out that tax oases would not permit full transparency, as, for example, central registers of economic corporate owners, which would shed a light on anonymous enterprises and trusts, did not exist. Apart from that, MEPs criticised the high tax breaks and depreciation opportunities, offered by these countries. With regard to corporations, MEPs complained that these would misuse tax assessments (confirmations by authorities issued to corporations as to how to calculate their tax liability) to minimise their tax base.
Country-by-Country Report, transfer price regulations and CCCTB
Whilst the country-specific report, introduced in the second Commission proposal, which shall clearly provide important information for tax authorities for example on profits, costs, tax paid by the parent company and the associated subsidiary, in order to share this information with other Member States, in which these corporations are economically active, shall be implemented as quickly as possible according to the European Council, the representatives of the corporations voiced concerns regarding the publication of such data. They justify this opinion by citing data protection and the protection of commercial secrets. With regard to transfer price regulations, MEPs demanded that it should be documented according to which criteria prices are calculated within an enterprise group. Finally, the invited business representatives declined to declare in more details whether a Common Consolidated Corporate Tax Base – a Europe-wide common system for calculating corporation tax to be paid – would be desirable or not. One had to review concrete proposals first.
Further information:
Commission raises the stakes in the fight against tax dumping