Sinn Féin MEP Matt Carthy has called on the European Commission to carry out a comprehensive analysis of the impact of the Common Consolidated Corporate Tax Base (CCCTB) on the tax revenue of member states by using new data that will be available under country-by-country reporting.
Carthy was speaking in response to the publication of a new report commissioned by GUE/NGL MEPs on the Panama Papers inquiry committee. The study is entitled, ‘Assessing the impact of the CCCTB: European tax base shifts under a range of policy scenarios’, and was written by academics and experts associated with the Tax Justice Network.
“Sinn Fein has raised concerns about this proposal regarding its impact on tax sovereignty since it was first raised in 2011. This report was carried out by academics who are in favour of a global switch to a unitary taxation system which treats a multinational group as a single entity, and does not address the issue of tax sovereignty. But the report shows the alarming limitations of the data that have been used by the European Commission and other sources in estimating the impact of the CCCTB proposal on member states’ tax revenue,” Carthy said.
“It suggests that Ireland, the Netherlands and Luxembourg would experience an inevitable sharp decline in revenue, but that this is not reflected in the Commission’s analysis because the main databases fail to take into account the dominance of US multinationals’ tax tricks in Ireland, for example.
“I fully support the call made by these academics for policymakers to address the problem of unreliable data by using the more comprehensive data resource created by the introduction of an OECD standard for country-by-country reporting when it is available – and the finding that taking major policy steps without such analysis would be deeply irresponsible.
“At the same time, the Irish government needs to act now to end the dangerous and unsustainable situation in which it actively markets the Irish state as a tax avoidance hub, and in which our public finances are severely over-reliant on the corporation tax receipts of a handful of multinationals. This situation leaves our public finances extremely vulnerable to changes in the international tax landscape, especially in the EU and the US.
“This report also confirms my key concern regarding the CCCTB proposal – that member states are being asked to transfer further powers to the Commission in exchange for the promise that this new system will end the ability of multinationals to shift profits. But shortcomings in the proposal mean this goal is unlikely to be achieved. This analysis finds that the proposal as it currently stands means that profit-shifting outside of the EU is not addressed at all, and that the introduction of the CCCTB would actually result in a significant decline in the corporate tax base in the EU.”
Carthy concluded: “I will be circulating this important report among fellow MEPs on the Economic and Monetary Affairs committee which is currently examining the CCCTB proposal, and urging the Commission to act on the report’s recommendation of carrying out a comprehensive analysis of the impact on member states’ revenue using new data available under country-by-country reporting.”