Analysis: No quick fix for corporate tax take as pressure to act builds
By John O'Donnell and Huw Jones
BRUSSELS/LONDON (Reuters) - Europe's leaders are talking tough about making companies pay more tax but they are expected to take only baby steps for fear of alienating big business during an economic slump.
Schemes used by Starbucks (SBUX.O: Quote), Apple (AAPL.O: Quote), Amazon (AMZN.O: Quote) and others, operating within existing law to minimize taxes, have prompted British Prime Minister David Cameron to put the matter on the agenda when he hosts a meeting of leaders from the Group of Eight leading industrialized nations on June 17/18.
The issue of aggressive tax 'planning' will then go to the Group of 20 global powers, including China, when a leading think tank, the Organisation for Economic Cooperation and Development(OECD), outlines steps next month to tackle it.
Lawmakers and officials predict progress will be slow. Europe is torn between the demands of small countries such as Luxembourg and Ireland, fiercely resisting change to their low-tax regimes which attract foreign investment, and states such as Britain and Germany, wary of driving away big employers.
Taken at face value, the global political direction is clear. "When you don't like some behavior but they are legal, you need to change the law," Pascal Saint-Amans, the OECD's head of tax, told Britain's House of Lords this week.
Recent political pledges to act have come as a welcome surprise to the European Commission's top tax official, Algirdas Semeta, who has struggled for years to get noticed.
"I have laid out a comprehensive approach to attack corporate tax avoidance from all angles," said Semeta. "Member states now need to follow through on this - to prove that they are as determined to stop tax avoidance as they say they are.
"It's about closing loopholes between national tax laws, tightening anti-abuse provisions, strengthening transparency ... and cracking down on tax havens," he said. Continued...