“We need to use the momentum globally to ensure that corporations pay their fare share of taxation”, EU Commissioner Valdis Dombrovskis outlines from the World Economic Forum 2017.

valdis-dombrovskis

World Economic Forum, Davos, 17-20/01/2017 Valdis Dombrovskis and Winnie Byanyima, Executive Director of Oxfam International, attend a session named ‘Taxation without borders: a fair share from multinationals’. Date: 19/01/2017. Location: Davos-Congress Center,Davos © European Union , 2017 / Source: EC – Audiovisual Service / Photo: Johanna Leguerre

At the third day of the World Economic Forum 2017 in Davos, the session “Taxation without Borders: A Fair Share from Multinationals” took place where tax-base erosion and profit shifting policies were discussed in view of the Panama Papers and the fact that countries lose tones of money when multinationals implement such strategies.

Emerging countries need to do more

Developing countries must be more decisive in order to be able to tackle the root causes of profit shifting and tax evasion by large corporations. According to Winnie Byanyima, emerging countries are losing a lot through tax exemptions. The Executive Director of Oxfam International points out that tax policies must alter and tax rates should increase to bring these financial resources back.

More specifically, Winnie Byanyima said that: “World leaders are failing to move fast enough, or broadly enough, to make firms pay their fair share. Kenya is losing 1.1 billion dollars through tax exemptions and incentives each year. That’s almost double its health budget; in a country where one in 40 children die at childbirth. This is really a human rights issue.”

However, Ángel Gurría, OECD secretary general, stated that progress has been done since the 2008 when the financial crisis began. The secretary general of the Organisation for Economic Co-operation and Development (OECD) pointed out that now we have 3.500 agreements to share tax information compared to 2008 when only 30 existed. The latter clearly reveals that we are closer to addressing the issue of profit shifting policies via cross- linked information and knowledge. It is more efficient that we tax everyone with the same tax rate and not just have the same tax rate everywhere; the OECD secretary general said.

EU overcomes OECD’s proposals

Valdis Dombrovskis, Vice-President and EU Commissioner of Euro and Social Dialogue, Financial Stability, Financial Services and Capital Markets Union, mentioned during the session that the Old Continent has been on the forefront of the tax avoidance issue targeting multinationals that intend to use transfer pricing techniques and loopholes to move their profits to countries with low corporate tax rates.

The EU Commissioner insisted that the time is now to fight tax erosion in order to make sure that multinationals are taxed properly. More in detail, Valdis Dombrovskis said: “ We need to use this momentum globally and within the EU to fight profit shifting to ensure that corporations pay their fare share of taxation; not more but not less.”

The EU is doing more than the OECD suggests taking the initiative to propose further tax avoidance laws in order to ensure that tax administrations within the EU are interconnected and well informed on how much tax is paid by multinationals in the EU and to the rest of the world. Besides, Apple’s case is demonstrating that the European Commission is struggling to make sure that the U.S. tech giant is taxed fairly and within the EU state rules.

Fiscal against monetary policy

Mateusz Morawiecki, the Polish Deputy Prime Minister, focused mainly on the fiscal policy. Mr Morawiecki stated that monetary policy is not working as good as we thought of despite the Quantitative Easing Programs introduced by the central banks and that is the reason we should target more on our fiscal policy.  It is imperative to obtain a solid tax base for everyone.

Lack of trust

The OECD secretary general supported that the level of tolerance by the people has been heavily decreased because of the crisis which has contributed to low growth, high unemployment, high inequalities and distraction of trust.

In particular, Ángel Gurría characterised the issue of people believing that taxes are perceived by everyone and not just middle class people and small and medium companies as a political one. It is crucial that people’s trust on the political system is regained in order to avoid similar to Brexit, Italian referendum, U.S. elections result problems.

Multinationals still have a way to profit

Beneficial ownership structure is a way that multinationals use in order to control and owe other firms. Companies use these strategies to hide criminal and political activities. The complexity of these ownership structures makes it hard to determine the firm’s owner and the origin of the money that flow into the company. Thus, large multinationals keep on benefiting from such policies as the OECD encounters great difficulties to reveal the real owner.

All in all, it is clear that people have lost their trust on governments believing that things are not getting any better and large corporations will continue profiting by using loopholes of the system.

However, as the panel shared an optimistic view for the future, it seems that there is room for improvement as the situation seems to alter in a sense that countries and organisations are working together to diminish inequalities ensuring that everyone is paying its fare tax burden.

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

the sting Milestone

Featured Stings

Can we feed everyone without unleashing disaster? Read on

These campaigners want to give a quarter of the UK back to nature

How to build a more resilient and inclusive global system

Stopping antimicrobial resistance would cost just USD 2 per person a year

The 28 EU leaders care more about fiscal orthodoxy than effectively fighting youth unemployment

Facebook wins EU approval for WhatsApp acquisition; just a sign of the times

MEPs adopt plan to keep 2020 EU funding for UK in no-deal Brexit scenario

EU Commission accuses Germany of obstructing growth and the banking union

OECD’s Gurría calls for overhaul of economic thinking to address global challenges

How do we build trust between humans and AI?

WHO and UNICEF in campaign to protect 1.6 million in Sudan from cholera

Copyright: MEPs update rules for the digital age

It ain’t over until Google says it’s over

Republic of Korea President proposes DMZ as future ‘peace and cooperation district’ on Peninsula

The Khashoggi affair: A global complot staged behind closed doors

GREXIT final wrap-up: nobody believed Aesop’s boy who cried wolf so many times

China’s lead in the global solar race – at a glance

Business models inspired by nature are the future

A Sting Exclusive: “Seize the opportunity offered by Africa’s continental free trade area”, written by the Director General of UNIDO

Charlotte in Ghana

The EU patent space and Unified Court are born

5G: How a ‘legion of robots’ could help save the rhino

Our Amazon is disappearing in ashes

Civilians ‘must never be a target,’ says UN in Afghanistan, amid troubling number of casualties during Ramadan

Onagawa’s spirit of togetherness: lessons from the 2011 tsunami

From Kenya to China, here’s why countries should start working together on AI

Canada leading the way on women’s inclusion and empowerment, says OECD

European Junior Enterprise Network – Ready to take the Step Into the Future?

How Asia could be the winner in the US and China’s Belt and Road race

EU and African leaders to jointly tackle the migration crisis across the Mediterranean

Public health through universal health coverage can help to attain many SDGs

Conditions deteriorating alarmingly in Yemen, warns senior UN official

These are the 4 most likely scenarios for the future of energy

What slums can teach us about building the cities of the future

Data exchanges: Strengthening Europol cooperation with non-EU countries

3 ways digitalization will help end crime

Japan to invest in euro values

Greece: The new government of Alexis Tsipras shows its colors

‘Comprehensively include migrants’ or sustainable development won’t happen, warns General Assembly President

Africa is helping the drone industry get off the ground. Here’s how

GSMA Reveals Shortlist For 2019 Asia Mobile Awards

EU Commission: Growth first then fiscal consolidation

“Financial crisis will not happen in China!”, the Chinese Premier underlines from Switzerland; the Sting reports live from World Economic Forum 2015 in Davos

On youth unemployment: unemployment is even bleaker for youth with disabilities

World Health Organization calls crisis meeting over deadly Ebola outbreak in DR Congo

EP Brexit Steering Group calls on the UK to overcome the deadlock

Amid ‘unprecedented combination’ of epidemics, UN and partners begin cholera vaccination campaign in DR Congo

The European Commission cuts roaming charges. But “it’s not enough”…

It’s time to switch to a four-day working week, say these two Davos experts

Campaign kicks off with High-level Event on #FairInternships

Trees in ‘green’ Cameroon refugee camp, bring shade and relief from ‘helter-skelter’ of life

Everybody against Germany over the expensive euro

We can save the Arctic if we follow the Nordic countries’ lead

Beware the fragility of the global economy

On technology and medical ethics

MEPs to prioritise environment and climate action in next long-term budget

Parliament toughens its position on banking union

It’s time for cybersecurity to go pro bono

80 adolescents a day will still die of AIDS by 2030, despite slowdown in epidemic

UN chief urges Somalis not to be ‘deterred’ by latest deadly terror attack

Election 2019: New, Updated seat projection for new Parliament

“Be aware where you put your I Agree signature on and something else”; now Facebook by default opts you in an unseen private data bazar

OECD tells Eurozone to prepare its banks for a tsunami coming from developing countries

More Stings?

Speak your Mind Here

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s