New regulations will force multinational companies to play by the rules.
Plaid Cymru MEP Jill Evans has welcomed Europe-wide moves to crack down on tax avoidance by international companies that use their multi-national presence to avoid paying full tax in countries where they operate, including in the UK.
The European Union’s Economic and Finance Council (Ecofin) has agreed new regulations to end ‘double non taxation’, a process by which multi-national companies artificially shift profits from one country to another to avoid paying tax.
Jill Evans MEP said that international companies avoiding tax means that Welsh families and businesses have to make up the shortfall or see cuts in public services, such as the NHS and schools.
The European Union has so far refused to name and shame companies involved in these practices, but previous cases involving a small number of banks in New Zealand and the United States have involved billions of dollars of tax being reclaimed.
Plaid Cymru MEP Jill Evans said:
“We welcome these new efforts at cracking down on multi-national companies who are abusing the tax system while leaving smaller businesses and Welsh families paying more than their fair share of tax.
“The cuts being forced on Wales and the rest of Europe in recent years because of the financial crash is a reminder that, when banks and big business fails, it is the rest of us that pick up the tab.
“When multi-national companies don’t pay tax, it means a bigger national deficit, and less money to spend on our essentials, such as the NHS, schools and rubbish collection.
“We all lose out, except for the companies themselves who make more money. This is unfair and unacceptable.
“In the case of these so-called ‘double non-taxation’ rules, multi-national companies are abusing their size to avoid paying the right amount of tax in the countries they operate, by using a set of tax rules in one country against the tax rules in another.
“This tax abuse was first taken seriously when it was raised in an OECD report in 2012 and an EU consultation followed later that same year. They said that large corporations have been artificially shifting profits to avoid paying the correct tax.
“Now we are hopeful that all EU governments will take these steps to crack down on international tax abuse.
“Plaid Cymru want to see fair tax competition between countries, based on voters’ choices of the tax policies they want to see in place. We are against multi-national companies abusing the system for their own benefit. That is why Europe-wide agreement is required – and it would be good if a global agreement could be reached on corporate tax avoidance.
“These steps being discussed by Europe are still just the tip of the iceberg, though. We must also ban tax havens that allow individuals and companies to hide their profits and avoid paying back into the societies that make them rich, introduce country-by-country reporting to increase transparency and introduce stronger anti-avoidance rules to stop tax abuse.”