Billions of euros of public money are lost every year due to aggressive tax evasion by multinational companies, but now a recently established subcommittee of the European Parliament is trying to take the fight against the multinationals and the member states that aid them with tax evasion.
The stakes are at least €50 billion a year in tax revenue. At the end of September, the European Parliament’s Subcommittee on Taxation (FISC) was set up, and the aims to detect and prevent tax evasion by multinational companies.
According to the head of the new subcommittee of the European Parliament, American technology giants such as Apple, Google and Amazon deserve special attention.
“The basic rule is that everyone has to take their share of taxes. However, the current situation is unfair. You pay taxes like I do. Most companies also pay taxes, but the biggest companies don’t pay. And that includes the five largest companies in the world, including the American technology giants,” said Dutch Socialist MEP Paul Tang.
These companies take advantage of legal loopholes and channel their profits to the EU member state with the best tax conditions. Paul Tang, chairman of the subcommittee, would also look at the tax affairs of his own country.
“We are taking up the fight against tax evasion. Some member states are helping this phenomenon. This is also the case in Luxembourg, Ireland and my country, the Netherlands. The European Parliament is the only organization that names these countries. They help the rich and companies avoid tax”, Tang said.
It is estimated that multinationals dodge between €50 billion and €70 billion a year in taxes. However, there is also strong opposition from some member states to cooperate on collecting taxes. Yet, the next step in European integration is expected to focus on the tax issue.
“Member states are committed to economic integration. The EU also consists mainly of economic policies. However, there can be no common economic policy without common taxation and common corporate rules. In other words, we need to move towards tax integration. Maybe one day an EU-wide corporate tax could be created,” said Edoardo Traversa, a Belgian university professor.
Digital commerce companies pay only half of the average tax level to the budget. Therefore, experts say there is an urgent need to modernize the tax system, the rules of which were mostly designed before internet commerce and the digital revolution.