‘100-year-old global tax system no match for 21st century corporate raiders’: Tax Justice Network responds to EU court decision on Amazon

PRESS OFFICE

‘100-year-old global tax system no match for 21st century corporate raiders’: Tax Justice Network responds to EU court decision on Amazon

Responding to the EU General Court’s overturning of the European Commission’s finding of Luxembourg state aid to Amazon1, Alex Cobham, chief executive at the Tax Justice Network, said:

“Today’s disappointing decision makes it painfully clear that our 100-year-old global tax system is no match for 21st century corporate raiders – and that EU state aid rules are not the answer. Everybody knows Amazon has an unfair tax advantage over local businesses, everybody knows that this is only part of a global pattern of multinational tax abuse, and everybody knows this costs us billions in lost tax which public services everywhere urgently need. But our current laws are frankly useless against the systematic abuses that are the basis of Luxembourg’s business model, and that of too many other major tax havens in the OECD.

“We must overhaul our global tax system and that starts with President Biden’s push to end the race to the bottom with a global minimum corporate tax rate. A global rate set at 21 per cent can claw back $640 billion in underpaid tax from multinational corporations like Amazon every year.2 But the EU response has been lukewarm at best, with French and German finance ministers only able to say that they “would not oppose”.

“For a global minimum corporate tax rate to work, we need tax transparency. Draft legislation was introduced in the US yesterday3 to require public country by country reporting and the European Union has committed to make such publication mandatory. But to their shame, the French and German governments appear to be working with the lobbyists to prevent the measure providing meaningful transparency for most countries.

“We know from the anonymised country by country reporting data published by the OECD last year that multinational corporations are shifting $1.38 trillion worth of profit into tax havens ever year in order to underpay tax.4 But because the data is anonymised, the public can’t tell which multinationals are doing the shifting. Multinational corporations must be required to publicly disclose their country by country reporting so that the tax abusers can be identified and held accountable, and profit shifting be deterred in the future.

“The global tax system is our most powerful tool for creating just societies that give equal weight to the needs of all people. But under pressure from corporate giants and powerful tax havens like Switzerland and the Netherlands, the global tax system was programmed to prioritise the desires of the richest corporations and individuals over the needs of everybody else. As a result, the world loses the equivalent of one nurse’s yearly salary to a tax haven every second. We must reprogramme our global tax system to prioritise people’s wellbeing and livelihoods over the desires of those bent on not paying their tax.

“Luxembourg costs the rest of the world over $9 billion in lost corporate tax every year by enabling multinational corporations to shift profit into its jurisdiction.5 The country ranks 6th on the Corporate Tax Haven Index 2021, our ranking of countries most complicit in helping multinational corporations.6 Today’s decision is a signal to Luxembourg and other major corporate tax havens that they can continue to operate as usual.”

-ENDS-

Contact the press team: media [@] taxjustice [.] net

Notes to editor:

  1. The announcement of the EU General Court’s decision is available here.
  2. Our analysis on how much each country can recover in underpaid corporate tax under a global minimum corporate tax rate is available here.
  3. More information about the new US legislation requiring public country by country reporting is available here.
  4. See our analysis of OECD aggregated country by country reporting data, revealing how much profit is shifted every year by multinational corporations and how much corporate tax each country loses to cross-border corporate tax abuse annually, here.
  5. The Tax Justice Network’s State of Tax Justice 2020 exposes how much tax each country in the world loses annually to global tax abuse and how much tax loss each country inflicts on the rest of the world by enabling tax abuse. View the report here.
  6. View a breakdown of Luxembourg’s ranking on the Corporate Tax Haven Index 2021 here. More information about the index is available here.