Tax competition across EU allowing multinationals to pay ‘miniscule amounts of tax’, says new report

New research commissioned by the Greens in the European Parliament has confirmed that many large corporations pay little tax in EU countries, and that in most countries, the larger the company the lower the tax rate. The analysed data used for the report shows multinational corporations can expect to pay as little as 2% of their profits in taxes in the most extreme cases. Between 2011 and 2015 the effective tax rate for multinationals in the EU averaged just 15%.

In recent years the EU has proposed key reforms to reduce tax avoidance by multinational companies in Europe, such as public Country-by-Country Reporting and a Common Consolidated Corporate Tax Base. However, these have been blocked by member states. Greens in the European Parliament are using the latest findings of a climate of low tax and tax avoidance by corporations to urge EU governments to stop blocking these reforms and implement them immediately.

Molly, who is a member of the European Parliament’s special committee on tax, said:

“This new report confirms that large corporations are managing to pay miniscule amounts of tax. Such vastly different corporate tax rates between different EU countries allows multinational corporations to game the system and lower their tax bills by shifting their taxable operations to the lowest bidder.

Tax competition costs European taxpayers billions every year, starving them of the revenues needed to fund our public services and infrastructure. It also means unfair competition between the large corporations that can offshore their profits and the smaller, local companies that can’t.  

“It’s time EU member states stopped blocking key tax reforms. By doing so they are colluding in ever-increasing social inequality, and the loss of faith in democratic politics that it causes. The European Commission must come forward with a proposal to introduce minimum effective tax rates across the EU to stop the damaging race to the bottom.”