• France's news in English
 

EU states call on big business to pay more tax

Published: 16 Feb 2013 10:38 GMT+01:00
Updated: 16 Feb 2013 11:30 GMT+01:00

France's Pierre Moscovici, Britain's George Osborne and Germany's Wolfgang Schaeuble said it was time for internationally-coordinated action to clamp down on the practice of shifting profits from the company's home country to pay less tax under another jurisdiction.

The drive -- which is backed by a study by the Organisation for Cooperation and Economic Development (OECD) on the consequences of the so-called profit shifting -- comes as cash-strapped governments try to use every means to inject new funds into their budgets.

"We are talking about something that is fundamentally legal. We need to modify the law," admitted the OECD secretary general Angel Gurria. "Avoiding double taxation has become a way of having double non-taxation."

"No single country can go by itself," he said at a news conference on the sidelines of the G20 finance ministers' meeting in Moscow, insisting that the drive was not aimed at "bashing" individual corporate giants.

Schaeuble said it was "unfair that multinational companies should be able to use globalisation as a tool" not to pay their fair share of taxes while Moscovici described the issue as a "matter of fairness for our citizens".

Osborne said that current global tax rules had been developed almost 100 years ago -- along principles set out by the League of Nations in the 1920s -- and few changes had been made since.

"This means that the tax system does not reflect how international companies do business."

"We want businesses to pay the taxes that we set in our countries. And this cannot be achieved by one country alone. No one country can create an international tax system by itself."

The ministers emphasised that their proposal was supported by the Russian presidency of the G20.

Online retailer Amazon, Internet giant Google as well as coffee shop chain Starbucks have been under the spotlight for their tax strategies in Britain and other EU countries in recent months.

Starbucks came under particular pressure in Britain following the revelation last year that it has paid just £8.6 million ($13.8 million) in British corporation tax since 1998, despite generating £3 billion in revenues. It has now pledged to voluntarily pay back millions in extra tax.

A person familiar with the OECD's report said it was essential to move rapidly, especially with the United States apparently not sharing Europe's wholehearted enthusiasm for the anti-tax avoidance drive.

"The timetable is going to be very tight -- otherwise the (OECD) report will be buried," the person said.

According to the OECD, some multinational companies use avoidance strategies that allow them to pay just five percent in corporate taxes while smaller businesses are paying 30 percent.

It says that practices have become more aggressive in the past decade, with some multinationals creating offshore subsidiaries or shell companies and taking advantage of the tax breaks offered in the countries where these are registered.

This has led to absurdities like the tax havens of Barbados, Bermuda and the British Virgin Islands in 2010 together receiving together more foreign direct investment than either Germany or Japan, the OECD said. 

In 2010, the creation of offshores meant the British Virgin Islands was the second largest investor in China, it noted.

The three EU states and the OECD warned that it would be smaller businesses that paid their taxes in full who risked bearing the brunt of the multinationals' complex schemes to avoid tax.

"In times of difficulty when you need to increase revenues, when the large multinationals are not making a contribution, you go for (taxes from) the small and medium enterprises or the middle classes," said Gurria.

"This is something that is quite undesirable."

Your comments about this article

2013-02-17 03:16:44 by Eric
Government is destroying the prosperity of the western world. Politicians are the greediest breed of humans.
Today's headlines
France: 43 percent say no to daily shower
Only 57 percent of the French shower every day. Photo: Shutterstock

France: 43 percent say no to daily shower

Over forty percent of French people don't take a shower every day, according to a new poll that took a closer look at French people's habits with all things water. READ  

Are top polluters funding Paris climate summit?
The EDF (Electricty of France) powerhouse of Cordemais near Nantes, western France. Photo: AFP

Are top polluters funding Paris climate summit?

France on Wednesday unveiled a list of companies which will sponsor the year-end UN climate talks in Paris, sparking accusations of corporate "greenwashing" from campaigners. READ  

Property in France
Ten French manors for the price of a London flat
This chateau is cheaper than an average London home. Photo: Leggett Immobilier

Ten French manors for the price of a London flat

The average property in London is now topping €700,000 (£500,000) - but can you imagine what you can get in rural France for that kind of money? Take a look at these ten rustic paradises in France and try to pretend your not tempted. READ  

Mediterranean Migrant Crisis
EU tells France to open border to 9,000 migrants
Photo: AFP

EU tells France to open border to 9,000 migrants

The European Commission laid out on Wednesday its controversial emergency measure to relocate tens of thousands of migrants around Europe. France was asked to open its doors to over a total of over 9,000 refugees over the next two years. READ  

France sees record foreign investment but...
France is proving to be more attractive to foreign investors, especially for industrial projects. Photo: AFP

France sees record foreign investment but...

Despite the doom and gloom France has seen a healthy jump in foreign investment, a new report by Ernst and Young has revealed. But the country's notoriously complicated tax and administrative systems plus high labour costs are holding it back. READ  

Cinemas pull 'France's American History X'
A scene from the film Un Francais. Photo: Mars Distribution

Cinemas pull 'France's American History X'

France's answer to American History X has been mysteriously cancelled in fifty cinemas ahead of its release next month, with the director hinting that links between France's skinheads and the far-right National Front are too disturbing a cocktail for film distributors. READ  

Russia: French Mistral deal dead in water
Photo: Frank Perry /AFP

Russia: French Mistral deal dead in water

Russia has decided that it is no longer interested in two helicopter carrier that it had previously ordered from France, deciding to build its own instead. READ  

Sarkozy free to rename party 'Les Républicains'
Former President Nicolas Sarkozy has succeeded in renaming his party. Photo: AFP

Sarkozy free to rename party 'Les Républicains'

Former President Nicolas Sarkozy's plan to win back the presidency gained a boost this week when a court threw out objections to his move to rename his UMP party "Les Republicains" as he attempts to give it a makeover. READ  

France to honour four French Resistance heros
The Pantheon, where the four Resistance fighters will be honoured. Photo: AFP

France to honour four French Resistance heros

Four heros of the French Resistance will be honoured with a burial at the Pantheon mausoleum in Paris on Wednesday. Although two of the coffins will remain empty after objections from family members. READ  

Truffle wars: French farmer on trial for murder
French farmer on trial for murdering a 'truffle thief'. Photo: Remy Gabalda/AFP

Truffle wars: French farmer on trial for murder

A French farmer went on trial this week for shooting dead a man he thought was stealing his truffles. The shooting a occurred during a so-called "truffle war" that saw French farmers regularly threatened by armed thieves. READ  

RECEIVE OUR NEWSLETTER AND ALERTS
France honours four French Resistance heros
Culture
The French film that cinemas are too scared to show
Features
How many of these stunning Paris streets have YOU walked down?
National
British woman bites off French reveller's thumb
National
200 years on, why is Waterloo still taboo for the French?
Features
Take a tour of the best Metro stations that Paris has to offer
National
Soon there'll be a fixed fare for a taxi ride from the airport into Paris
National
Drug dealers in Marseille are offering customers loyalty cards
Soon there'll be no minimum for using your bank card in France
Features
Eurovision is around the corner - and we don't fancy France's chances
Features
Fancy starting a business and living in Paris? There's help available
National
Are you fearing a Brexit? Maybe it's time to become a French citizen
How hard-up French are tempted by money to take migrants to the UK
Bupa
Sponsored Article
Healthcare: 9 questions every expat should ask
Education
More English words (including 'le selfie') sneak into French
Charlie Hebdo to give €4.3m to attack victims
National
French Protestants bless gay marriage
Opinion
Why elitism is dragging France down
Features
RECIPE: How to make your own picnic-perfect meringues
Business & Money
French tax declaration deadline: Key things to remember
VIDEO: Can YOU pronounce the trickiest word in French?
France tops holiday wish list for children
National
Study: Women do bulk of housework in France
National
VIDEO: Police use force on Calais migrants
National
This man is France's Instagram king. But who else makes the top list?
Features
Free museum entry, film festivals, sports... see What's On this in May
Culture
Behind the curtain: A closer look at the Cannes Film Festival
National
It's a boy! Baby born on Air France flight to Paris
Features
Love-locked: Whatever happened to Paris's beautiful bridges?
'Forget the UK election, expats should be able to vote in France'
Thomas Piketty backs Miliband for Britain but not Hollande for France
Gallery
The most spectacular sunset pictures from around France
National
France tells migrants in Calais to 'forget the UK and stay here'
Who's to blame? Trial after Frenchman dies downing 56 shots
Society
VIDEO: See what's beneath the surface of the French Riviera
National
French teen suicide after sex video web bullying
France launches bid to buy Europe's biggest and most spectacular dune
Business & Money
Why May 2015 is the best month in years to work in France
Five great outdoor bars in Paris to check out this summer
Double standards? French Muslim barred from class over long skirt
National
France goes on the defensive after UN experts say 'racism is trivialised'
Five reasons we should be worried about France's new snooping laws
International
The French don't seem to care about the UK election and that's normal
Culture
Only in France? Naked comedian stuns French culture minister
Latest news from The Local in Austria

More news from Austria at thelocal.at

Latest news from The Local in Switzerland

More news from Switzerland at thelocal.ch

Latest news from The Local in Germany

More news from Germany at thelocal.de

Latest news from The Local in Denmark

More news from Denmark at thelocal.dk

Latest news from The Local in Spain

More news from Spain at thelocal.es

Latest news from The Local in Italy

More news from Italy at thelocal.it

Latest news from The Local in Norway

More news from Norway at thelocal.no

Latest news from The Local in Sweden

More news from Sweden at thelocal.se