Helmut Melzer
The EU Parliament recently passed a new EU directive that provides for tax transparency for corporations (public country-by-country reporting). However, according to David Walch from Attac Austria: “The EU directive for more tax transparency for corporations has been watered down over the years by the corporate lobbies. It therefore remains largely ineffective. Unfortunately, an amendment that would have greatly improved the directive was rejected.”
The directive stipulates that multinational corporations only have to publish data from EU states and a few countries listed by the EU. All other worldwide group activities are left out and therefore completely non-transparent. Walch warns that corporations will now even increasingly shift their profits to opaque areas outside the EU in order to avoid disclosure requirements.
Only a few corporations have to publish a small amount of data
Another major weakness of the agreement is that only those corporations that have made sales of more than 750 million euros in two consecutive years are obliged to be more tax transparent. However, around 90 percent of all multinational corporations would not be affected at all.
It is also disappointing that the reporting requirements leave out important data – especially intra-group transactions. But that's not all: corporations can even delay the reporting obligations at their own discretion by up to 5 years due to "economic disadvantages". Experiences with the already existing reporting obligation for banks show that they make excessive use of it.
Study shows tax injustice
A new study from Tax Justice Network, Public Services International and the Global Alliance for Tax Justice calculated that states lose US$483 billion annually through tax abuse by multinational corporations ($312 billion) and the wealthy ($171 billion). For Austria, the study calculates losses of almost 1,7 billion dollars (around 1,5 billion euros).
That's just the tip of the iceberg: according to the IMF, indirect tax losses from corporations are three times as high as their profit shifting fuels tax dumping in tax rates. The total loss from corporate profit shifting would be well over $1 trillion globally. Tax Justice Network's Miroslav Palanský: "We only see what's above the surface, but we know the tax abuse is much greater underneath."
The rich OECD countries are responsible for more than three quarters of global tax shortfalls, with corporations and the wealthy taking advantage of their tax rules, which are prone to abuse. The main victims of this are low-income countries, which are suffering the greatest losses in relative terms. While the OECD countries shape these global tax rules, poorer countries have little or no say in changing these grievances.
Photo / Video: Shutterstock.
