Happy Anniversary Luxleaks
Posted: Nov 05, 2015 in General by Instinctif Partners
Happy Anniversary Luxleaks – But still no reason to celebrate
Jan Mayrhofer & Anke Schäffner
Immediately after the ‘Lux-leaks’ revelations, the European Parliament held an extraordinary debate on the fight against tax evasion and in February 2015, the European Parliament has set up a special committee on tax rulings (TAXE). Last week, TAXE recommended measures to make corporate taxes in the EU fairer and more transparent by asserting the principle that taxes should be paid where profits are made. It also recommended country-by-country reporting for multinationals. This change is crucial as it enables the calculation on the level of the parent, rather than its subsidiaries, and hence avoids tax loopholes through transfer pricing.
Notwithstanding the European Parliament’s goodwill, an in-depth study by the European Network on Debt and Development published earlier this week maintains that “the complex and dysfunctional EU system of corporate tax rulings, treaties, letterbox companies and special corporate tax regimes still remains in place”. Slow progress towards a new tax system can partly be ascribed to the unwillingness of several global players like Amazon, McDonald’s and Walt Disney to play a constructive part in the investigations following LuxLeaks.
Today, 5 November 2015 marks the anniversary of Luxleaks, which indeed functioned as impulse for change – albeit slowly. Above all, LuxLeaks and the efforts by the European Parliament that followed in suit is a powerful reminder of why Europe has found it in its common interest to adopt common rules. The only way to hold trans-national corporations accountable is trans-national lawmaking. The European Parliament has already given the green light for country-by-country reporting and the EU finance ministers could make it a reality as soon as 16 November. If multinationals want to have a stake in the new tax rulings, it is now or never.