Fair taxation in a digitalised and globalised economy - BEPS 2.0 (debate)
Speaker: Irene TINAGLI (Italy, Group of the Progressive Alliance of Socialists and Democrats in the European Parliament / Partito Democratico)
Date: 2019-12-16

  Irene Tinagli,  author. – Madam President, USD 240 billion dollars: according to OECD estimates this is the amount of missing tax revenues due to multinationals’ tax elusion. Researchers from Berkeley and the University of Copenhagen estimated that in 2016, 40% of big companies’ profits were shifted to tax havens every year. For many countries, this means losing huge portions of tax revenues that could be used to address increasing needs in education, health care, public services and pensions, not to mention investments in physical and digital infrastructures, in research and development: all things that benefit people and firms of all sizes, small and large ones alike.
Everybody should contribute to this. But while citizens, consumers and small and medium businesses do pay their share, with effective tax rates that may go up to 40% or even more sometimes, many large multinationals do not, and this is not acceptable anymore. These situations not only create problems of social justice, but also relevant market distortions and unfair competition.
We talk a lot about building a level playing field, but what we have today on tax matters is not level at all. Yes, we want to reward efficiency, we want to reward innovation, but that should take place within a fiscal framework that applies the same tax rules to everyone. That is why we welcome the commitment of 135 countries that are negotiating, at the OECD level, a reform to address these challenges.
On behalf of the Committee on Economic and Monetary Affairs (ECON), today I present a resolution and oral questions on these reforms, and we urge the Commission and Member States to act and agree on a joint and ambitious EU position in these negotiations. I thank the Commissioner for being here today to answer our questions. The first one: how does the Commission intend to ensure a common EU position in the current international discussions on tax challenges posed by the digitalisation of the economy? And the second: how does the Commission intend to ensure that the ongoing international discussions around Pillar One are coherent and consistent with EU proposals in this field? And third: how is the Commission preparing the implementation of the outcome of such international deals? And, in the event of a regrettable absence of an international solution, when, and in what form, will the Commission act to ensure a coordinated EU reply?
Parliament expects an active role of the Commission. Europe can play a fundamental role in shaping this debate only if we are united, only if we speak with one voice. With this initiative, Parliament intends to express its position on two main points. The first one: we should reform the allocation of taxing rights, going beyond the concept of physical presence in order to include all large firms with an active engagement and interaction with customers and users – also by digital means. The second: we encourage a minimum rate to be set at a fair and sufficient level to discourage profit-shifting and prevent damaging tax competition. Indeed, according to the corporate tax statistics by OECD, there are countries where the corporate tax rate is basically zero, and we can’t accept that anymore.
So let me conclude, dear Commissioner and dear colleagues, by saying that it’s time to modernise our tax rules to ensure that big companies pay their fair share of taxes where the value is created and where the economic activity is taking place. We should not ring-fence the digital economy, but we should look at all multinationals that are increasingly finding ways to elude taxes. The current international fiscal regime creates competitive distortions among players; it deprives countries from their sovereign decision to tax corporate profits to finance public services; and most importantly, it increases inequalities and puts most of this fiscal burden on less mobile taxpayers, workers and consumers. This is simply not fair. Our citizens demand tax justice, and it is time to give them an answer.