NEWS

Companies sometimes use ways to avoid taxes, such as declaring their benefits in the EU country with more lax tax rules. These practices will have to end.

MEPs backed on March 15 plans to establish a consolidated common corporate tax base in the EU. They voted two laws that will make it difficult for companies to transfer their profits to those Member States where corporate taxes are lower.

One of those responsible for this legislation in Parliament, the French MEP Alain Lamassoure, of the European People's Party, welcomed the fact that the European Commission has recently pointed out to the Member States that they are engaged in aggressive tax planning, including Belgium, Cyprus, Hungary, Ireland, Luxembourg, Malta and the Netherlands.

"Any attempt to establish aggressive tax planning schemes, which artificially attract tax revenue to some Member States, at the expense of others, will become obsolete," says Lamassoure.

"National and EU leaders are beginning to understand that the current systems are outdated and that the situation of citizens and small businesses is getting worse," said Dutch Social Democrat Paul Tang, another of those responsible for the report. Parliamentary on the common base of corporate taxes.

What will change the new tax regime?

When the new tax regime is established, based on the common consolidated corporate tax base, the profits or losses of the multinational that has subsidiaries in different Member States will be calculated in accordance with this new common approach. This makes a difference with what is happening today when different rules apply in each EU country.

The multinational may consolidate its result by adding all the profits and subtracting all the losses of its subsidiaries in the different Member States. The new common base will make the transfer of benefits more difficult.

The multinational may also declare its net gains or losses in a Member State (one-stop shop).

On the other hand, the benefits will be shared with the Member States where the multinational has subsidiaries, according to a formula that takes into account buildings, machinery, number of employees and sales company in the Member States.

Each Member State will declare its share of the earnings according to its national corporate tax rate.

"Parliament introduced a new factor, based on data collection, in the formula that determines how corporate tax revenues are distributed among the Member States," Lammasoure explained.

"We need a digital tax as soon as possible," Tang added. "Our investigation showed that the loss of tax revenue from Google and Facebook is around 5,100 million, within three years. So it's time to change the rules for that we can play fair again, "he said.

Personal data is an intangible asset but of great value, extracted by firms such as Facebook, Amazon and Google to create their wealth, but currently they are not considered when calculating their tax obligations.

In fiscal matters, Parliament has an advisory role in the legislative process. EU laws are adopted unanimously by the member states in the Council.
 
One of Parliament's priorities is the fight against tax evasion and tax fraud. On March 1, 2018, MEPs established a special commission to investigate irregularities in the field of taxation.