The committee is currently investigating the extent to which multinational corporations may be side-stepping their tax obligations in Europe. MEPs have expressed concern that US multinationals might be denying EU governments vital funds by failing to pay tax in parts of the EU where they operate but shield profits from tax authorities. For example, Facebook's director of public policy for southern Europe, Delphine Reyre, was asked by the committee why the social media giant continued to operate in the UK when, according to its accounts, it failed to make a profit there. In response, Ms Reyre contended that significant staff hirings and share awards in the UK market had depressed Facebook's profits during the 2014 reporting period, while remuneration by shares had offered a significant tax offsetting opportunity. Similarly, when the committee turned its eye to the billions of dollars of Google profits currently held by the search giant in Bermuda, the company's director of public policy and government relations, Nicklas Lundblad, maintained that use of the tax haven avoided US corporation tax rather than the tax authorities in the EU.
Global crackdown
The MEP committee is backing a set of proposals from the Organisation for Economic Cooperation and Development designed to ensure that large multinational corporations pay corporate taxes in the countries where they make sales and generate profit. According to the OECD, the base erosion and profit sharing (BEPS) guidelines, if implemented, have the potential to generate up to $250 billion per year in extra tax revenue for European Union governments. The guidelines are the culmination of an international project launched by the G20 nations over two years ago in response to public anger over global tax avoidance, with nearly 90 countries working together to create an agreed method of integrating the OECD guidelines into existing bilateral treaties.
Corporate pushback
There has been significant pushback against the guidelines among those corporations targeted by the MEP committee, with representatives raising concerns about the legal groundwork underpinning the potential implementation of the OECD recommendations. For example, corporate representatives have argued that the OECD need to agree on a definition of transfer pricing if multinationals are to avoid being taxed by EU governments and the US government on the same set of profits. Without broad-based agreement on definitions and wording, corporations will not be ensured a 'level playing field' for making tax judgments, argued Mark Hubbard, Barclays global head of tax. Source: The Guardian
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