European Parliament’s Tax Rulings Committee (TAXE) has said it may introduce sanctions against multinational companies for failing to take part in their investigation into agreements between some member states and the companies for beneficial tax status.
— ECON Committee Press (@EP_Economics) September 17, 2015
Hearing in the @EP_Economics/#TAXE on fair corporate taxation. pic.twitter.com/drDWgBmdeY
— Margrethe Vestager (@vestager) September 17, 2015
Amazon, Barclays, Coca Cola, Facebook, Fiat Chrysler, Google, HSBC, IKEA, McDonald’s, Philip Morris, Walmart and Walt Disney all declined an invitation to meet with lawmakers who are investigating whether member states knowingly implemented and exploited tax regimes to attract businesses.
Doing the office coffee run to #starbucks. Boss gave me the list. #luxleaks @Juncker_JC pic.twitter.com/ai9VJtUmMb
— Martini Seltzermayr (@mseltzermayr) September 17, 2015
The investigation was triggered by the LuxLeaks scandal, where it was revealed that that there were more than 500 private tax arrangements between the Luxembourg tax administration and more than 300 multinational corporations between 2002 and 2010, showing the extent of the use of deals featuring complex financial structures designed to obtain drastic tax reductions.
Many of the corporations are alleged to have made arrangements to channel profits from transactions in EU member states through Luxembourg and other countries, including Ireland, which offered lower levels of taxation than the country where the transaction took place.
Sanctions Threat
However, the failure of some of the major companies to meet with lawmakers has led to frustration and calls for sanctions against them. The chair of TAXE, Alain Lamassoure said:
"It is surprising to see that most of the multinationals initially decline to appear before our committee. If they stick to their refusal, it will come across as if they have more to lose than to win by being transparent about the way they fulfill their legal obligations in Europe. It is up to their shareholders, staff, clients, partners and all the EU citizens to decide what they make of that."
"The EP's President must now take up the baton and push for the non-compliant corporations to be excluded from the EU's transparency register, so they also lose access to other institutions," Green MEP Sven Giegold said.
The TAXE committee has no powers to demand the appearance of the companies. However, its members have called on the parliament’s Constitutional Affairs to decide whether it has the power to impose sanctions on business representatives that refuse to cooperate with the committee.
European Commission president Jean-Claude Juncker, who was Luxembourg's prime minister and finance minister, has denied any role in allowing the multinationals to broker deals in the country to evade paying taxes elsewhere.
