Multinationals advise EU on how to tackle their own tax evasion

11 May 2011

Multinationals advise EU on how to tackle their own tax evasion

SP Member of Parliament Farshad Bashir has asked the government for its comments on reports that the European Commission is exclusively consulting advisers to, and representatives of, multinationals regarding its approach to tax avoidance. 'So Europe is going to ask corporations how we can best tackle their lucrative tax avoidance,’ says Bashir. ‘We should be demanding that the advice group not be restricted to multinationals. Only then can something be done about the billions lost by European countries to these multinationals’ tax evasion.’

 Farshad Bashir The European Commission established the advice group as part of its consultations regarding transfer pricing, a method of determining how much tax on its profits a multinational would have to pay in each country. Around two-thirds of world trade does not take place on the market proper, but is instead internal to each multinational. Because in such cases no market price is available, tax offices work on the basis of fictive prices in order to determine the countries in which profits were earned. By manipulating these fictive prices, the multinationals can move profits to tax havens and thus avoid tax on a massive scale.
The advice group is composed exclusively of representatives of multinationals and advisers from the four major consultancy firms which earn a great deal of money by setting up large-scale constructs to enable tax to be avoided. Bashir is concerned about this one-sided composition. “These people seem to have no interest whatsoever in doing anything about tax avoidance,” he says. “Nothing will ever change if this is the approach.”
The SP has campaigned for years against the excessive influence of corporate lobbyists on policy in Brussels. It is rumoured that as many as 50,000 lobbyists work in Brussels, of whom more than 90% represent corporate business. In the more than a thousand expert groups which advise the European Commission on different aspects of policy and legislation, the corporate world is similarly over-represented. “This is yet another example of how Brussels principally serves the interests of corporate capital,” says Bashir. “With the excuse that corporations have a great deal of expertise at their disposal, multinationals seize the chance to be in it at the inception of European legislation and use this to further their own interests.”

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