Thank you Mr. President
Dear Colleagues, dear Commissioner,
240 billion dollars: this is the amount of missing tax revenues due to multinationals’ tax elusion, according to OECD estimates. Researchers from Berkeley and the University of Copenhagen estimated that in 2016 40% of big companies’ profits were shifted to tax heavens every year, corresponding to an amount of around 650 billion dollars.
For many countries this means losing huge portions of tax revenues that could be used for increasing needs in education, health care, public service and pensions, not to mention investments in physical and digital infrastructures, and in R&D: all things that benefit people and firms, small and large ones alike. Everybody should contribute to this; but while citizens, consumers and small and medium businesses do pay their share (with effective tax rates that may go up to 40% or even more), many large multinationals do not.
This is not acceptable anymore.
This situation not only creates problems of social justice, but also relevant market distortions and an unfair competition. We talk a lot about building a “level playing field”: what we have today on tax matters is NOT levelled at all. Yes, we want to reward efficiency; we want to reward innovation. But that should take place within a fiscal framework that applies the same tax rules to everyone.
That is why we welcome the commitment of 135 countries that are negotiating -at the OECD level – a reform to address these challenges.
On behalf of the ECON committee, today, I present a resolution and oral questions on this reform, and we urge the Commission and Member States to act and agree on joint, ambitious EU position in these negotiations.
I thank the Commissioner for being here today in order to answer our questions:
1. How does the Commission intend to ensure a common EU position in the international discussions on tax challenges posed by the digitalisation of the economy?
2. How does the Commission intend to ensure that the ongoing international discussions around Pillar One are coherent and consistent with EU proposals in this field? How does the Commission anticipate the impact on those proposals and the impact on revenue collection by Member States?
3. How is the Commission preparing the implementation of the outcome of such international deal? And In case of a regrettable absence of an international solution, when and under what form will the Commission act to ensure a coordinated EU reply?
The Parliament expects indeed an active role of the Commission: Europe can play a fundamental role in shaping this debate only if we are united, speaking with one voice. With this initiative, the Parliament intends to express its position on two main points:
First, we should reform the allocation of taxing rights – going beyond the concept of physical presence – in order to include all large firms with an active engagement and interaction with customers and users, also by digital means;
Second, we encourage a « minimum rate to be set at a fair and sufficient level to discourage profit shifting and prevent damaging tax competition ». Indeed, the current minimum is no longer acceptable, according to the Corporate Tax Statistics by OECD, there are countries where it is basically 0%.
Let me conclude, dear Commissioner, dear colleagues, by saying that it’s time to modernise our tax rules to ensure that big companies pay their fair share of tax where the value is created and where the economic activity is taking place. We should not ring-fence digital economy: but we shall look at all multinationals that are increasingly finding ways to elude taxes.
The current international fiscal regime creates competitive distortions among players and we need to restore a level playing field for the smaller ones; it deprives countries from their sovereign decision to tax corporate profits to finance public services – those same services firms that are likely to benefit from. Most importantly, it increases inequalities and puts most of the fiscal burden on less mobile tax payers: workers and consumers.
Our citizens demand tax justice and it is time to give them an answer.