Lux Leaks, tax evasion and tax fraud – a €1 trillion bill that needs to be plugged
Last month a story broke about an investigative report into the various tax systems used by multinational corporations registered in the grand Duchy of Luxembourg, known as “Lux Leaks”.
A report by the International Consortium of Investigative Journalists looked at a leak of 548 private tax rulings negotiated by the accounting firm PricewaterhouseCoopers. These rulings, also known as “comfort letters” were negotiated by the firm on behalf of more than 340 multinational corporations and allowed corporations to reduce their tax bills by routing profits through Luxembourg, saving the multinational corporations billions of dollars in taxes.
Lux Leaks is part of a larger issue of tax avoidance, tax evasion and tax fraud which costs EU member states €1 trillion each year – this is not acceptable and we need to deal with these problems as quickly as possible.
Today MEPs received welcome news from Commission President Jean-Claude Juncker that he will present an action plan to fight tax evasion and tax fraud within six months.
President Juncker’s commitment will see the introduction of measures to combat tax evasion and tax fraud. It will include rules at EU level aimed at moving to a system whereby the country where profits are generated is therefore the country where taxes are paid.
Labour and the S&D Group have a long history of fighting against both tax evasion and aggressive tax avoidance. Last year, it was the S&D group who drafted a European Parliament report that called for:
• All multinational companies to be compelled to report what they earn, where they earn it and how much tax they pay, broken down country by country
• A common approach taken to tackling the use of tax havens once and for all
• A blacklist of those companies that are engaging in tax fraud
It is great to see the Commission bringing forward legislation in this field and I, along with my fellow Labour MEPS, will continue to push the Commission to set common EU criteria in order to fight against tax havens.
While multi-national companies have avoided paying their dues, citizens across the EU have continued to see public services cut and living standards squeezed.
We need legislation now and I look forward to the work that will be done – it’s time to close down loopholes which allow this evasion to exist.