European Council urged to act on corporate tax dodging

By staff writers
19 Dec 2013

European leaders should use a meeting of the European Council to agree further action against tax dodging by multinationals, campaigners urge in a new report.

The Council, which meets from 19 to 20 December 2013, promised in May to crack down on tax dodging, which every year costs Europe around 1 trillion Euros, and developing countries between 660 and 870 billion Euros.

The new report, Giving with one hand and taking with the other: Europe’s role in tax-related capital flight from developing countries 2013, reveals the state of money laundering, tax avoidance and tax evasion, and the extent of government action against them, across 13 EU Countries.

In the UK, the report finds that while ministers have said a lot about tax dodging and taken some welcome steps against it, the Government is still resisting important reforms which would help to protect people in the UK and poor countries from financial criminals.

"While there has been significant political rhetoric in the last year on cooperation, the UK’s main political focus is on ensuring the UK has the most competitive tax regime in the G20," says the report.

"Some of the policies designed to realise this goal have been criticised as undermining international cooperation. There are also concerns about the role of the UK in facilitating tax evasion, avoidance and capital flight, especially when looked at in conjunction with its associated Overseas Territories and Crown Dependencies," it says.

At European level, the report – coordinated by the European Network on Debt and Development (Eurodad) – shows that much remains to be done.

Tove Maria Ryding, Tax Coordinator at Eurodad said: "This week, we’re asking European Union leaders to take the first step by making companies reveal to the public who their owners are, where they operate and what taxes they pay."

"The second step is to ensure that multinational companies pay their fair share of tax, both in the EU and in the rest of the world," Ms Ryding added.

She continued: "For developing countries, tax dodging is especially devastating, with more money leaving their economies than what they receive in aid.

"While European citizens donate money to combat poverty in developing countries, multinational corporations with headquarters in Europe are making large profits in those same countries but many are avoiding their taxes. Until our governments put a stop to this, Europe is giving with one hand and taking with the other".

The report concludes:

• All governments surveyed are failing to demand adequate tax transparency from companies, in that no government has implemented full country-by-country reporting.

• Most governments are reluctant to let members of the public find out who really owns the companies, trusts and foundations within their jurisdictions.

• Data showing governments’ exchange of tax-related information are rarely publicly accessible and countries in the global South are barely participating in this form of exchange, which could help them identify tax evaders.

• No European governments support equal inclusion of developing countries in policy-making on tax and transparency.

The European Network on Debt and Development (Eurodad) is a network of 48 non-governmental organisations from 19 European countries working on debt, poverty reduction and finance for development.

* Eurodad: http://www.eurodad.org

* Eurodad reports: http://www.eurodad.org/reports/index

[Ekk/3]

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