Economic justice advocates bow to low-tax EU member states after the European Union agreed in principle late Monday night to introduce a minimum effective corporate tax rate of 15% across its bloc of 27 countries. He denounced the officials who did it and warned that the deal would not work. Enough to prevent tax evasion for large corporations.
“EU member states have ignored opportunities to raise standards and have established a tax system that is ill-suited to the many crises facing the world.”
“The deal shows that the EU is being held hostage by a handful of European tax havens,” said Chiara Putaturo, an EU tax expert at Oxfam.”The minimum tax rate is too low.” Bowing to the demands of EU countries, such as Ireland and Malta, which seek to profit from lower tax rates, this includes allowing ultra-high-earning, low-tax multinationals to evade minimum tax rates. Generous exemptions are included.”
EU officials have applauded plans to ensure a baseline level of taxation on profits generated through continental activities for companies with annual sales of more than €750 million ($797 million). They argued that the bloc would be closer to fulfilling its pledge to be the first to implement international tax reforms negotiated by the Organization for Economic Co-operation and Development (OECD).
However, according to Oxfam, the agreement includes “so-called ‘material carve-outs’, which are ‘in countries where companies have many employees and tangible assets such as factories and machinery, where more than 15% We can pay a lower tax rate.”
Anti-poverty groups say Irish officials, whose main corporate tax rate is 12.5%, are “strongly advocating” against a global minimum tax rate above 15%, while Malta is the “most reticent EU.” countries,” he pointed out. European negotiations dragged on for over a year.
In recent months, Poland, Estonia and Hungary (home to the lowest corporate tax rates in the bloc at 9%) have also hampered progress to stop the race to the bottom of the EU and global corporate tax rates.
After months of stalemate, EU ambassadors only reached a tentative deal Monday night on a minimum effective corporate tax rate, along with a €18 billion ($19 billion) financing package for Ukraine. A deal that could give Budapest access to billions of euros in EU cash.” financial times report.
Mr Putatullo argued that the newly concluded agreement “does not solve the problem of aggressive tax competition as it is a copy of a weak international tax agreement”.
“EU countries have ignored opportunities to raise standards and have established a tax system that is unfit for the many crises the world is facing,” she said.
Once the EU’s proposed directive on the 15% corporate tax rate is formally adopted, member states will have to incorporate it into their national legislation by the end of 2023.
The bloc’s plans follow in the footsteps of the OECD Agreement on Minimum Effective Taxation, which was approved by 137 jurisdictions last October.
Last year, Oxfam shared its recommendations on how to improve the international minimum taxation across the EU.
“What EU countries can do is ensure a more equitable distribution of tax revenues with low-income countries,” Putatro said on Tuesday. “They can do this by overhauling unfair bilateral tax agreements.”
Despite criticism from wealthy OECD countries, UN member states unanimously approved an Africa-led General Assembly resolution on 23 November, calling for “the possibility of developing a framework for international tax cooperation and based on treaty common dream report.
“The EU should not blacklist poor countries that do not sign tax agreements that go against their national interests,” Putatro said on Tuesday.
“Instead, the EU should listen to their demands to support a global UN tax treaty,” she added.
