Special tax committee: Majority of companies refuse invitation to speak with MEPs

Written by Julie Levy-Abegnoli on 16 June 2015 in News
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MEPs have hit out at companies refusing to meet with parliament's special tax committee, saying they must 'have something to hide'.

After last year's 'LuxLeaks' revelations, which unveiled extremely preferential tax deals struck by member states' governments and multinationals - especially Luxembourg, under the leadership of commission president Jean-Claude Juncker - MEPs rallied together to look into such practices.

Parliament's tax ruling and other measures similar in nature or effect (TAXE) special committee got to work last March, with an initial mandate of six months, to make recommendations to parliament's economic and monetary affairs committee, which is drafting two reports on the issue.

The decision had somewhat angered the Greens/European Free Alliance (Greens/EFA) and the Confederal Group of the European United Left/Nordic Green Left (GUE/NGL) groups, who had requested that an enquiry committee be set up, arguing that it would have considerably more powers.


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Now that the special committee is halfway through its initial mandate, MEPs have complained that the vast majority of the companies they had requested meetings with have refused their invitation.

According to European People's Party (EPP) deputy Burkhard Balz, these include, "Google, Fiat, Amazon, Inbev, Ikea, HSBC, Coca-Cola and McDonald's".

However, he explains that, "the companies who refused in a first reaction to come to the tax committee have been given a second chance. On 23 June and 2 July there will be other committee meetings. We invited them and some have already agreed to come. Others have not yet replied".

This is obviously problematic, as parliament's co-rapporteur on the TAXE committee Michael Theurer says, "they are the only ones who can answer questions on whether the dubious tax rulings were proactively offered by specific member states, or whether businesses or consultants requested them".

The Alliance of Liberal Democrats for Europe (ALDE) MEP tells this website that, "some companies refused with a view to the ongoing state aid investigations, like Fiat and Amazon or Inbev, which they have a right to do. Others argued that they could not secure a speaker for the date proposed, like Google, Ikea or HSBC - but they did not suggest alternative dates to come to the committee."

"I think it is highly outrageous that all these large multinational enterprises, which staff their Brussels lobby offices with highly qualified experts, cannot find someone qualified to answer the questions of elected representatives of European citizens".

GUE/NGL shadow rapporteur Fabio De Masi says "it seems a little bit odd that they pretty much all provided very similar answers and that none of them decided to engage in a dialogue".

 

Guilty until proven innocent

And all the MEPs who spoke with the Parliament Magazine agree that this is, to some extent, an admission of guilt on behalf of these multinationals.

Balz tells us that, "of course those who do not want to come before the committee have something to hide".

This is echoed by Theurer, who insists that, "shying away only reinforces our impression that they have something to hide from the tax-paying public".

Eva Joly, a vice-chair of the committee, highlighted that, "no logistical excuse is acceptable". She is especially critical of "companies such as Amazon that manage to be featured at length in the press - at very little cost - to announce that they are reviewing their tax structure. They should come before the committee to present these structures and outline the changes they intend to make".

 

Possible sanctions?

Burkhard Balz had initially suggested that representatives from companies refusing to cooperate would have their access to EU institutions revoked as a possible sanction, but the EPP deputy now insists that, "the committee is not a tribunal. Its task is to understand what has been happening so far and where the problems are. It is not our task to punish the companies - that is the commission's job, in case it is an infringement of competition law".

Eva Joly points out that "parliament is paying the price of [parliament president] Martin Schulz and the large groups - the Progressive Alliance of Socialists and Democrats, ALDE and EPP - opposing the Greens' request to set up an enquiry committee. The TAXE committee is just a special committee. When an institution censors itself from the get-go, it's harder for it to command respect."

"When an enquiry committee requests meetings or documents, a negative or partial response must entail meaningful sanctions, for individuals, companies and public institutions".

Fabio De Masi says, "I have nothing against restricting access to institutions to powerful interest groups, so I think this would be a very symbolic measure. What is much more needed are effective responses to what they are doing."

"These companies are using legal loopholes - much of what they have done is legal. What would hurt them much more would be to stop them from being able to use transfer pricing in order to shift profits and losses and to optimise taxation".

He adds, "we need to change the mandate of the committee and do what we have proposed from the beginning, which is to set up an enquiry committee, with much more legal power than a special committee".

 

An extended mandate for more effectiveness?

De Masi complains that, "we haven't seen one single [tax ruling] document, except those that were already accessible or delivered by the commission". As a result, the special committee's mandate will be extended to November so that it has more time to gather information and issue useful recommendations.

But in his view, the enquiry committee "is just an attempt to calm public anger - we won't deliver anything."

"I certainly support the extension of the mandate, but I am still convinced that we need a true enquiry committee. Otherwise we are making fools of ourselves - it is bad for parliament's reputation, because nobody will ever take such a committee seriously".

Eva Joly says that the extension means that, "companies, council and member states that have cooperated very little still have a chance to play by the rules. Otherwise, parliament will have to draw conclusions both in terms of its approach and politically".

Yet Michael Theurer insists that, "the mandate is about tax rulings and the arising systemic problem leading to double non-taxation and far-reaching tax avoidance. The committee is not executing a tax audit".

The TAXE committee's mandate has now been extended to November.

 

About the author

Julie Levy-Abegnoli is a journalist and editorial assistant for the Parliament Magazine

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