The parent company of fashion giant, Zara, is the latest corporation to be exposed for avoiding corporate tax. The company had a net income of almost €3bn in 2015 and has one of the highest net profit margins in the sector: 13.8% in 2015. But new research shows the company saved at least €585 million in taxes between 2011-2014, by using aggressive corporate tax avoidance techniques, mainly in the Netherlands, Ireland and Switzerland.
The report by the Greens into the latest corporate tax dodge is launched today by the Greens in Europe at a special press conference. Greens say that the latest revelations show the urgent need for policy changes to put an end to corporate tax avoidance. Greens are calling for mandatory public Country-by-Country-Reporting (CbCR) of key financial data to enable scrutiny of whether taxes paid in each country reflect economic activities; a single set of rules for determining taxable income, known as a Common Consolidated Corporate Tax Base (CCCTB); and a minimum corporate income tax throughout the EU to prevent a destructive race-to-the bottom on rates.
Commenting on the latest revelation, Molly, who is a member of the Panama papers committee of inquiry in the European Parliament, said:
“Zara has been found tax shopping; an activity that seems very much in fashion among multinational corporations. The dodgy tax avoidance techniques, while legal, are ethically dubious and raise questions about whether Zara pays taxes where its real economic activity takes place.
“It’s time for EU governments to try a new range of measures, long championed by the Greens. Public Country-by-Country-Reporting and a minimum corporate tax rate would help stop tax competition and profit shifting.
“The Commission’s recent proposals on a Common Consolidated Corporate Tax Base are to be welcomed. While there is a way to go, the EU is moving in the right direction when it comes to tackling corporate tax avoidance.
“Meanwhile the UK is at a crossroads. Will we follow Europe in promoting action to end corporate tax avoidance, or follow the route being pushed by some hard-Brexit supporters and become one of the globe’s leading tax havens? It is clear that the public interest will be best served by following the EU’s lead on tax policy and we must all work to ensure that Brexit does not encourage further tax competition between countries.”