Corporations in europe: eu continues to allow tax cheating

Finance ministers want to provide information on corporate rebates. But there are no plans to ban the practices that are advantageous to companies.

Even the coffee company Starbucks is said to use many tricks to ease its tax burden. Photo: ap

The 28 EU states want to dare a little more transparency in tax policy. In the future, they want to communicate to each other which tax loopholes they grant to large corporations. Massive tax breaks, such as those uncovered in the LuxLeaks affair in the fall of 2014, should thus be made more difficult in the future.

The new rules are to apply from January 2017, the EU finance ministers decided in Luxembourg on Tuesday. However, the reform falls far short of the demands of the European Parliament and the plans of the OECD, the Paris-based club of major industrialized countries. On Monday, the OECD presented a 15-point plan to fight tax evasion. In the future, it wants to make it impossible for companies such as Amazon or Google to legally make themselves poor before the authorities. That is precisely what will remain permitted under the reform that has now been adopted.

The "tax rulings" uncovered in Luxembourg – that is, the tax rulings that are particularly advantageous for corporations – will not be banned. They will only be made more transparent. And the ministers aren’t being too careful about transparency either.

In contrast to the EU Commission’s proposal, the tax rulings will not be centrally recorded and analyzed in Brussels. The Commission is to receive only slimmed-down data records – making it difficult to uncover tax cheating. Moreover, not all tax privileges will be uncovered. The new regulation only applies to preliminary rulings that were issued in the past five years and are still valid, said German Finance Minister Wolfgang Schauble (CDU).

Sharp criticism from the European Parliament

Sharp criticism came from the European Parliament – for once even across party lines. "The lazy compromise of the member states cuts the EU Commission off from crucial information," complained Sven Giegold of the Greens.

Markus Ferber, CSU

"Public coffers continue to lose billions"

A central database would have created a disincentive effect on companies, the financial expert said. Without this central registry, states could continue to negotiate rules with corporations that hurt taxpayers across the EU.

CSU politician Markus Ferber expressed a very similar view: "If the text is ultimately adopted as it is, the member states will have missed a great opportunity to create more tax transparency in Europe. The public coffers will continue to lose billions."