The Rocky Road to Globalization.

The EU, with a single currency and a single market is making moves to make tax treatment more uniform.  This may be a mini model for a global response to the current issues of national taxation while doing business globally.

Eliza Ferreira, the co-rapporteur of a special committee on tax rulings,  says tax harmonization is not on the agenda but “you can’t leave the EU member states complete freedom in a single market and single currency.” She added that the need for action is urgent because the erosion of Europe’s tax base is “as bad as the [situation caused by] banks a few years ago,” and creates an unstable political situation. On the state aid tax cases pursued by Competition Commissioner Margrethe Vestager: “We are really supporting her. It was right for us to put pressure on the Commission. This is just the top of the iceberg.”

“The problems of Luxembourg are a generalized practice, it is not just Luxembourg … It is a game that is not controlled… We end up with multinationals paying almost no tax while the vulnerable go through very harsh austerity, as with SMEs who cannot benefit from all these mechanisms. So our appeal is for a new approach; for Parliament and Commission to make the Council move.”

The committee is expected to call for new impetus to deliver the CCCTB (Common Consolidated Corporate Tax Base) proposed by the Commission in 2011. They are not interested in tax rates per se. “The levels don’t really matter, what matters is how you calculate it and what the exemptions are,” Ferreira says. Finally, “Tax reporting needs to include how much is actually paid,” and the EU must define what is a tax haven, or at least lay out criteria for national governments to apply.