The European Commission has unveiled plans to create a unified corporate tax system across the European Union. So far, the budgets of the member countries do not receive billions of euros every year due to legal loopholes that allow large companies to evade taxes.
The European Commissioner for Economic Affairs explained the decision to collect additional money in business, in particular, by the fact that after the victory over coronaviruses, a lot of it will be needed for economic recovery:
“What makes us take this step is that after the pandemic we will need strong government resources,” said Paolo Gentiloni. “In addition, it is necessary to restructure our taxation system, which was developed taking into account the requirements of the last century: before the transition to digital technologies and, in a sense, before globalization”.
Brussels does not like the fact that European capitals are competing with each other to reduce tax rates to attract investment. He offers a new tool called BEFIT. This is a set of fiscal rules that will allow the same taxes to be levied everywhere, as well as to redistribute corporate profits between the EU countries.
Capital will simply have nowhere to hide. Perhaps the incentive to earn it will weaken. But such a measure is supported by Oxfam, an organization that fights for financial justice.
“The company’s profit will be calculated once at the EU level using a formula that will be determined based on various factors such as sales or staff size”, said Oxfam advisor Chiara Putatour. – According to the same formula, the profit will be distributed among the EU member states. So it will be the fairest system for redistributing profits. It will work where the real economy operates”.
In the past, attempts to establish uniform taxation rules in the EU have failed. European countries such as Ireland, Luxembourg or the Netherlands defended their right to provide corporations with favorable financial conditions. But now the problem has taken on a global scale. For example, the Organization for Economic Cooperation and Development wants to force tech giants to pay more taxes, and the United States has proposed setting a minimum rate of 21% worldwide.