At ECOFIN, ONE urges Finance Ministers to commit to tax transparency
Tax evasion poses a major drain on fiscal resources in Europe. But it is not just the EU that suffers: last year, developing countries lost an estimated $1 trillion to illicit financial flows as a result of illegal activities such as tax evasion and tax avoidance. At the informal meeting of Ministers for Economic and Financial Affairs (ECOFIN) on April 24-25 in Riga, the EU’s plan to combat tax evasion and corporate tax avoidance will be discussed. ONE urges Finance Ministers to push for transparency measures that require country-by-country reporting (CBCR) by multinationals to be made public.
In developing countries, the costs of tax evasion and avoidance are estimated to be greater than what countries receive in aid. When governments are robbed of the resources that are needed to invest in health care, food security or essential infrastructure, it costs real lives.
Public country-by-country reporting for large multinational companies would help developing countries to follow the money and collect the taxes they are owed. This would unleash critical funds to invest in their own development and ultimately help reduce dependency on aid.
Valentina Barbagallo, ONE’s Policy and Advocacy Officer, said:
“Finance ministers don’t only hold the key to the coffers on aid budgets, they also have the possibility next week to unlock unprecedented new resources for development – and this without any budgetary effort by EU Member States. They should commit to passing legislation requiring large EU multinationals to report transparently on their taxes and profits in each country where they operate. In this way, the EU can help citizens in developing countries to follow the money and ensure their governments aren’t losing out on much-needed funds for fighting poverty.”
“The recent Luxleaks scandals provoked outrage amongst European citizens towards companies’ aggressive tax avoidance, and showed that political reforms are necessary. EU Finance Ministers should urge the Commission to take timely action by presenting, in the upcoming June tax package, a legislative proposal to introduce public country-by-country reporting requirements for large multinational companies in the EU.”
The Financing for Development Conference in Addis Ababa in July will be a key moment to ensure that the political will, policy reform measures and financial investments are in place to end extreme poverty by 2030. Taking the lead on public country-by-country reporting will demonstrate the EU’s political commitment to a successful outcome by addressing domestic resource mobilisation strengthening and transcending the ‘aid-only’ discussions.
“Ahead of the Financing for Development Conference in July in Addis Ababa, we call on Member States to embody this commitment in the common EU position that will be agreed on in May. By supporting the introduction of public country-by-country reporting, the EU can champion win-win legislation that can benefit both EU citizens and those in the poorest countries.”
Notes to editors
- Contact, information &interviews: Tess Uytterhoeven| Media Manager | [email protected] | m: +32 (0)471 89 64 22
- Public country-by-country reporting: This is a way of shining a light on tax evasion. It requires multinational companies to report financial information such as turnover, pre-tax profits, taxes paid and number of employees for every country where they are present, and making this information available to the public.
- At the Foreign Affairs Council (FAC) in May 2015, the common EU position for the “Third International Conference on Financing for Development” in Addis Ababa in July 2015 will be agreed on.
- ABOUT ONE: ONE is a campaigning and advocacy organization of more than 6 million people taking action to end extreme poverty and preventable disease, particularly in Africa. Not politically partisan, we raise public awareness and press political leaders to combat AIDS and preventable diseases, increase investments in agriculture and nutrition, and demand greater transparency in poverty-fighting programs. To learn more, go to ONE.org.