European commissioner for competition Margrethe Vestager holds a press conference on the EU decision to set out a template for recovering unpaid taxes and preventing tax avoidance by multinationals at the European Commission in Brussels last month. The European Union ordered Starbucks and Fiat to each repay up to 30 million euros in back taxes in the wake of the LuxLeaks scandal. Photo: AFP

EU failing to tackle tax dodging one year after ‘LuxLeaks’: campaigners

Published: 3:38pm, 3 Nov 2015

EU countries are still failing to tackle tax avoidance practices despite vowing to shut down loopholes after the LuxLeaks scandal one year ago, a report by campaign groups said.

The 28 member states of the European Union have passed a number of measures in the 12 months since LuxLeaks revealed that top companies, including Pepsi and Ikea, had reduced their tax rates to as little as one per-cent in sweetheart deals with Luxembourg.

The revelations, unearthed by a group of investigative journalists, were a huge embarrassment to European Commission head Jean-Claude Juncker, who served almost two decades as Luxembourg prime minister at the time of the deals.

But Tuesday’s report by 19 organisations including Oxfam, coordinated by the European Network on Debt and Development, said most member states still provide “ample opportunities” for multinationals to “dodge taxes and hide money”.

“Although tweaks have been made and some loopholes have been closed, the complex and dysfunctional EU system of corporate tax rulings, treaties, letterbox companies and special corporate tax regimes still remains in place,” the report said.

Luxembourg and Germany remain the “worst culprits” in terms of offering options to conceal company ownership, the report said, although Denmark and Slovenia are introducing public registers of company ownership.

More EU governments are, for example, pushing for confidentiality to conceal where global companies do business and how much tax they pay, it said.

After the scandal emerged, Juncker tasked the Commission to push through steps to crack down on tax deals.

Brussels has launched a series of probes into the deals and last month it ordered Starbucks and Fiat to each repay up to ¤30 million (HK$256 million) in back taxes for deals they had with the Netherlands and Luxembourg respectively.

EU ministers also agreed that national authorities would automatically exchange information on tax deals with multinationals.

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