- 2 min read
- Published: 25th February 2021
Oxfam welcomes breakthrough on corporate tax transparency after nearly 5 years of EU deadlock
Oxfam Ireland disappointed that Ireland voted against basic tax transparency measure.
Today, after almost five years of deadlock, EU governments in the Council finally backed new EU rules on corporate tax transparency. The proposal requires multinationals to publicly report on what profits they make, how much tax they pay, and where they pay it. Member states, the European Parliament and the Commission will now have to agree on a compromise text in ‘trilogue’ negotiations.
Ireland was one of the countries to vote against the proposal.
Reacting to the news, Jim Clarken, Oxfam Ireland CEO said: “This agreement is an important first step towards greater corporate tax transparency, but it is not enough. The revelations from multiple leaks like the Paradise Papers and Lux leaks have shown the many ways multinational corporations are shifting profits to avoid tax.
"Oxfam has documented how such tax avoidance undermines developing country's ability to generate adequate revenues to provide comprehensive public services, such as healthcare and education - which help tackle poverty and foster prosperity.
It is really disappointing that Ireland voted against this basic tax transparency measure. This proposal is a vital step towards making sure that multinational corporations pay their fair share of taxes, in developing as well as developed countries.”
“We urge the European Parliament and Council to build on the current proposal with strong transparency rules. These rules must cover operations in all countries, not just those in EU countries.”
Caroline Reid | 087 912 3165
Notes to editors:
- Today, the majority of member states in the Competitiveness Council supported a proposal requiring multinationals to publish their income tax information. Next week, member states will confirm their support with an official vote through written procedure.
- The European Commission in 2016 sent a draft text to the European Parliament and Council in the wake of the Luxleaks scandal. The European Parliament passed the file to the Council in July 2017.
- According to Oxfam’s and other CSOs’ analysis, the Council’s compromise has some weaknesses including:
- an obligation for companies to publicly report information on a country-by-country basis only for their operations in EU members states and certain third countries identified but yet to be defined as tax havens.
- a “corporate-get-out-clause” allowing a reporting exemption for “commercially sensitive information”
- a reporting requirement applied only to companies with an annual consolidated turnover above EUR 750 million. This will exclude 85 - 90 per cent of multinationals.
- According to conservative estimates, Governments lose $245 bn in tax revenue annually due to corporate tax abuse by multinationals worldwide. Lower income countries’ tax losses are equivalent to nearly 52 per cent of their combined public health budgets. Luxembourg, at the centre of the #Openlux scandal, attracts an estimated $66bn in profits artificially from multinationals each year.
- Since the start of the COVID-19 pandemic, the European Commission has approved €3.1 trillion in state aid to companies in member states suffering from the economic hit of the COVID-19 crisis.