MEPs today approved a series of recommendations from the European Parliament's special tax committee (TAXE) aimed at tackling corporate tax avoidance.
The committee, set up in February in response to the 'LuxLeaks' scandal that revealed Luxembourg authorities had permitted corporate tax structures that significantly reduced multinationals' tax bills. Companies implicated in the scandal include Pepsi, Ikea and Heinz.
The amount of money lost to EU member states through corporate tax avoidance each year is estimated at €1.1 trillion. Jean-Claude Juncker, the EU Commission President, has identified tackling corporate tax avoidance as one of the Commission's top 10 priorities.
The European Parliament has unequivocally backed the fight against aggressive tax avoidance. However, the contents of the TAXE committee's report have divided opinion, with some MEPs concerned about the impact on national sovereignty.
Commenting on the report, S&D group spokesperson for the special TAXE committee, Peter Simon, noted the importance of EU-wide action, saying; "We are not dealing with isolate incidents here, but rather with systematic tax dumping that is organised by, or at least tolerated by, the state."
He continued; "The negative effects of tax avoidance by multinational companies have to be borne by all other taxpayers, including small and medium enterprises."
Simon concluded by saying he believes the work of the TAXE committee will, "make clear what we expect from member states and the European Commission," and that; "It must be our goal to make companies pay taxes in those countries where profits are generated."
His S&D group colleague, Elisa Ferreira, co-author of the TAXE committee report, offered a similar opinion. She described tax avoidance as having created a "politically unbearable" situation.
Commenting on the report she said; "Today, Parliament has given the EU governments and the European Commission a clear roadmap to fight aggressive tax planning by multinationals and to change this unacceptable situation."
However, she emphasised that, "the work is not over. We could not access some information. By setting up a new committee, we hope to complete our work and keep up the pressure so that these recommendations are translated into concrete actions."
MEPs from the Parliament's right wing ECR grouping rejected the report, arguing that while they believe multinational corporations should pay more tax, it should be up to member states to decide.
Specifically, they criticised the reports’ suggestion of introducing a compulsory common consolidated tax base and the definition of a minimum taxation rate.
Ashley Fox, UK Conservative spokesman on the committee said; "Conservative MEPs are strongly in favour of measures to tackle unfair or illegal practices such as tax avoidance or aggressive tax planning.
"However, we strongly believe that issues relating to direct taxation are a national prerogative, and insist that there should be no change to the unanimity rules in the Council."