24.11.2017   

EN

Official Journal of the European Union

C 399/74

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having regard to Article 225 of the Treaty on the Functioning of the European Union,

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having regard to the draft report of the special committee on tax rulings and other measures similar in nature or effect (2015/2066(INI) (the TAXE 1 special committee)),

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having regard to the final report of the Organisation for Economic Co-operation and Development (OECD)/G20 Final Base Erosion and Profit Shifting (BEPS) Project published on 5 October 2015,

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having regard to Rules 46 and 52 of its Rules of Procedure,

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having regard to the report of the Committee on Economic and Monetary Affairs and the opinion of the Committee on Industry, Research and Energy (A8-0349/2015),

A.

whereas a consortium of journalists, the International Consortium of Investigative Journalists (ICIJ), on tax rulings and other harmful practices in Luxembourg (LuxLeaks) revealed in November 2014 that nearly 340 multinational companies (MNC) secured secret deals from Luxembourg that allowed many of them to slash their global tax bills to a minimum, to the detriment of Union public interest, while creating little or no economic activity within Luxembourg;

B.

whereas the revelations showed that some tax advisors have deliberately, and in a targeted fashion, helped MNC to obtain at least 548 tax rulings in Luxembourg between 2002 and 2010; whereas those secret deals feature complex financial structures designed to create substantial tax reductions;

C.

whereas, as a result of those tax rulings, a large number of companies have enjoyed effective tax rates of less than 1 % on the profits they have shifted into Luxembourg; whereas while benefiting from various public goods and services where they operate, some MNC do not pay their fair share of tax; whereas close-to-zero effective tax rates for the profits generated by some MNC can hurt the Union and other economies;

D.

whereas in many cases Luxembourg subsidiaries handling hundreds of millions of euros in business maintain little presence and conduct little economic activity in Luxembourg, with some addresses being home to more than 1 600 companies;

E.

whereas the investigations carried out under the TAXE 1 special committee revealed that the practice of tax rulings does not exclusively take place in Luxembourg but is common across the Union; whereas the practice of tax rulings can be used legitimately to provide the necessary legal certainty for business and reduce the financial risk for honest firms, but is nevertheless open to potential abuse and tax avoidance and might, in providing legal certainty only to selected actors, create some degree of inequality between companies to which rulings have been granted and companies which do not use such rulings;

F.

whereas regard is had to the report from the OECD published on 12 February 2013 entitled ‘Addressing Base Erosion and Profit Shifting’ which proposed new international standards to combat BEPS;

G.

whereas regard is also had to the Communiqué issued following the Meeting of Finance Ministers and Central Bank Governors of the G20 which took place on 5 October 2015;

H.

whereas, with some laudable exceptions, national political leaders have not been sufficiently forthcoming in addressing the problem of tax avoidance in corporate taxation;

I.

whereas the European Union has made major steps towards economic integration such as the Economic and Monetary Union as well as the Banking Union and that Union-level coordination of tax policies within the limits of the Treaty of the Functioning of the European Union is an indispensable part of the integration process;

J.

whereas corporate income tax revenue for the 28 Member States of the Union amounted to an average of 2,6 % of GDP in 2012 (1);

K.

whereas, in a context where investment and growth are lacking, it is important to retain companies in or attract companies to the Union and whereas, therefore, it is crucial for the Union to foster its attractiveness to local and foreign businesses;

L.

whereas all tax planning should take place within the boundaries of the law and the applicable treaties;

M.

whereas aggressive tax planning consists of taking advantage of the technicalities of a tax system, or of mismatches between two or more tax systems or legal loopholes, for the purpose of reducing tax liability;

N.

whereas aggressive tax planning schemes often result in the use of a combination of international tax mismatches, very favourable specific national tax rules and the use of tax havens;

O.

whereas, unlike aggressive tax planning, tax fraud and tax evasion constitute above all an illegal activity of evading tax liabilities;

P.

whereas the most adequate response to aggressive tax planning appears to be good legislation, proper implementation thereof and international coordination as to desired outcomes;

Q.

whereas the overall loss in State revenues due to tax avoidance from corporate taxation is generally compensated for by either raising the overall level of taxation, cutting public services, or increased national borrowing, thereby damaging other taxpayers as well as the overall economy;

R.

whereas a study (2) estimates that revenue losses for the Union due to tax avoidance from corporate taxation could amount to around EUR 50-70 billion, a year, this figure representing the sum lost to profit shifting and whereas this study also estimates that revenue losses for the Union due to tax avoidance from corporate taxation could in reality amount to around EUR 160-190 billion if special tax arrangements, inefficiencies in collection and other such activities were taken into account;

S.

whereas the same study estimates corporate income tax efficiency to be 75 %, although the study also confirms that this does not represent the amounts that could be expected to be recovered by tax authorities, because a certain percentage of those sums would be excessively expensive or technically difficult to collect; whereas according to the study, if a complete solution to the problem of BEPS were available and implementable across the Union, the estimated positive impact on tax revenues for Member State governments would be 0,2 % of total tax revenues;

T.

whereas loss arising from BEPS represents a threat to the proper functioning of the internal market and to the credibility, efficiency and fairness of corporate tax systems within the Union; whereas the same study also makes clear that its calculations do not include estimates of activity within the shadow economy, and that the opacity of certain companies' structures and payments mean it is difficult to estimate the impact on tax revenues accurately, and therefore there may be a significantly larger impact than the report estimates;

U.

whereas the loss arising from BEPS also clearly demonstrates the lack of a level playing-field between those companies which operate only in one Member State, in particular SMEs, family businesses and self-employed persons, and pay their taxes there, and certain MNC which are able to shift profits from high tax to specific low tax jurisdictions and engage in aggressive tax planning, thereby reducing their overall tax base and placing additional pressure on public finances to the detriment of Union citizens and SMEs;

V.

whereas MNC use of aggressive tax planning practices conflicts with the principle of fair competition and corporate responsibility embodied in communication COM(2011)0681 since devising tax planning strategies requires resources which are only available to large firms and since this results in an absence of level playing field between SMEs and large corporations, which needs to be urgently addressed;

W.

whereas stresses further, that tax competition in the Union and vis-à-vis third countries can be in some cases harmful and can lead to a race to the bottom in terms of tax rates while improved transparency, coordination and convergence provides an effective framework to guarantee fair competition between firms in the Union and protect state budgets from adverse outcomes;

X.

whereas measures allowing aggressive tax planning are incompatible with the principle of sincere cooperation among Member States;

Y.

whereas aggressive tax planning is facilitated by increasing business complexity and by the digitalisation and globalisation of the economy, among other factors, leading to distortions of competition harmful to growth and to Union companies, in particular to SMEs;

Z.

whereas the fight against aggressive tax planning cannot be tackled by Member States individually; whereas non-transparent and uncoordinated corporate tax policies carry a risk for the fiscal policy of Member States, leading to unproductive outcomes like the increase of taxation of less mobile tax bases;

AA.

whereas the lack of coordinated action is causing many Member States to adopt unilateral national measures; whereas such measures have often proven ineffective, insufficient and in some cases even detrimental to the cause;

AB.

whereas what is needed is therefore a coordinated and multi-pronged approach at national, Union and international level;

AC.

whereas the Union has been a pioneer in the global fight against aggressive tax planning, notably in promoting progress at OECD level on the BEPS project; whereas the Union should continue to play a pioneering role as the BEPS project develops seeking to prevent the damage that BEPS can cause both to Member States and also to developing countries around the world; including ensuring action on BEPS and beyond BEPS issues of significance to developing countries such as those detailed in the report to the G20 Development Working Group in 2014;

AD.

whereas the Commission and the Member States shall ensure that the comprehensive OECD package of measures on BEPS is implemented as a minimum standard at Union level and remain ambitious; whereas it is of crucial importance that all OECD countries implement the BEPS project;

AE.

whereas the Commission should clearly set out how it will implement all 15 of the OECD/G20 BEPS project deliverables beyond and in addition to the areas for action already mentioned in this report, proposing as soon as possible an ambitious plan of legislative measures, so as to encourage other countries to follow the OECD guidelines and the Union's example in the implementation of the Action Plan; whereas the Commission should also consider the areas in which the Union should go further than the minimum standards which the OECD recommends;

AF.

whereas according to the Union treaties the power to legislate on corporate taxation is currently vested in the Member States, yet the vast majority of problems linked to aggressive tax planning are of a multinational nature;

AG.

whereas more coordination of national tax policies therefore represents the only feasible way to create a level playing field and avoid measures that favour large MNC to the detriment of SMEs;

AH.

whereas the lack of coordinated tax policies in the Union leads to significant cost and administrative burden for citizens and businesses operating in more than one Member State within the Union — even more so for SMEs — and results in unintended double taxation, double non-taxation, or facilitates aggressive tax planning and whereas such cases should be eliminated and therefore require more transparent and simpler solutions;

AI.

whereas specific attention in the design of tax rules and proportionate administrative procedures should be given to SMEs and family businesses, which are the backbone of the Union economy;

AJ.

whereas by 26 June 2017 a Union-wide register for beneficial ownership has to be operational, aiding in tracking down possible tax avoidance and profit shifting;

AK.

whereas the revelations of the LuxLeaks scandal and the work carried out by the TAXE 1 special committee clearly show the need for Union legislative measures to improve transparency, coordination and convergence within corporate tax policies in the Union;

AL.

whereas corporate taxation should be guided by the principle of taxing profits where they are generated;

AM.

whereas the European Commission and the Member States should continue to play a very active role in the international arena in order to work for the establishment of international standards based primarily on principles of transparency, exchange of information and abolition of harmful tax measures;

AN.

whereas the principle of ‘Policy Coherence for Development’, as set out in the Treaty on the Functioning of the European Union, requires the Union to ensure that all stages of policy-making in every field, including in relation to corporate taxation, do not militate against, and instead promote, the goal of sustainable development;

AO.

whereas a coordinated approach to corporate taxation system across the Union would enable tackling unfair competition and enhancing the competitiveness of Union companies, in particular SMEs;

AP.

whereas the Commission and Member States should further deploy electronic solutions in taxation-related procedures to reduce administrative burdens and simplify cross-border procedures;

AQ.

whereas the Commission should assess the impact of tax benefits granted to existing special economic zones in the Union; encourages, in this regard, the exchange of best practices between tax authorities;

AR.

whereas increased transparency in the area of corporate taxation can improve tax collection, make the work of tax authorities more efficient and is crucial for ensuring an increase in public trust and confidence in tax systems and governments, and this should be an important priority;

AS.

whereas the power to legislate on corporate taxation is vested in the Member States, yet the vast majority of problems linked to aggressive tax planning are of a multinational nature; whereas more coordination of national tax policies therefore represents the only feasible way to address the problems of BEPS and aggressive tax planning;

AT.

whereas improved coordination alone will not solve fundamental problems arising from the fact that different rules regarding corporate taxation exist in different Member States; whereas part of the overall response to aggressive tax planning must involve the convergence of a limited number of national tax practices; whereas this can be achieved while still preserving the sovereignty of Member States in relation to other elements of their corporate tax systems;

AU.

whereas the overall efficiency of tax collection, the notion of tax fairness and the credibility of national tax administrations are not undermined only by aggressive tax planning and BEPS activities; whereas the Union and Member States should take similarly decisive action to address the problems of tax evasion and tax fraud within both corporate and individual taxation as well as problems relating to the collection of taxes other than corporate taxes, in particular VAT; whereas those other elements of tax collection and administration represent a substantial part of the existing tax gap;

AV.

whereas the Commission should therefore also consider how it will address those wider issues, in particular the enforcement of VAT rules in the Member States and of their application in cross-border cases as well as the inefficiencies in the collection of VAT (which in some Member States constitutes a major source of national income), VAT-avoidance practices and also the negative consequences of some tax amnesties or non-transparent ‘tax forgiveness’ schemes; whereas any such new measures should involve consideration of the balance of costs and benefits;

1.

Requests the Commission to submit to Parliament by June 2016 one or more legislative proposals, following the detailed recommendations set out in the Annex hereto;

2.

Confirms that the recommendations respect fundamental rights and the principle of subsidiarity;

3.

Considers that the financial implications of the requested proposal should be covered by appropriate budgetary allocations;

4.

Instructs its President to forward this resolution and the accompanying detailed recommendations to the Commission, the Council, and the governments and parliaments of the Member States.