In the face of aggressive tax planning, tax avoidance and profit-shifting practices by many multinational corporations, the Political Affairs Committee said that it was necessary for States to be provided with a broader tax base again to cover their public financing needs, pointing in particular to the problems of corporate taxation in the digital economy.
Adopting the report by Georgios Katrougalos (Greece, UEL) today, the committee, meeting by videoconference, stressed that the ability of governments to raise funds through taxation necessary for the funding of public services was “a fundamental anchor for democracy”.
To ensure fair taxation of global corporate profits, the committee encouraged member States to promote the Inclusive Framework on Base Erosion and Profit Shifting (BEPS) – developed under the auspices of the OECD and the G20 – with a view to reaching a consensus-based agreement on such issues as how taxing rights are determined, how taxable profits are allocated among jurisdictions, and the establishment of a global minimum tax.
The parliamentarians added that multilateralism was the best means of achieving tangible results and that a consensus at international level was the best way to reform the international tax system.
Member States should also avoid “a race to the bottom" of national tax systems, which could undermine sound public finances and high-quality social services for all, the committee said.
Finally, the committee called on OECD and Council of Europe member States to adopt rules on transparency and automatic exchange of information for tax purposes between countries to ensure tax fairness and compliance.