At the beginning of December, our colleague, Associate Prof. Petr Janský took part in a panel discussion within European Parliament
"Do harmful tax practices within and outside the EU create distortions of competition in the Single Market?”,
where members of the Subcommittee on Tax Matters discussed with their guests the existence of current harmful tax practices outside the EU and how the existing tools could be improved to eliminate them. The debate then focused on to what extent harmful tax practices within the EU create distortions of competition in the Single Market and which legislative or non-legislative tools could be used to tackle them.
In his presentation Petr Jansky says that while we still will have to wait for more precise answers, generated by undertakings such as his new project CORPTAX or the new EU Tax Observatory, we can already see that some promising progress has taken place on both policy and research fronts. The corporate tax reform debate has developed, and we now also have better evidence of tax avoidance and profit shifting by multinational corporations. We now know that profit shifting is harmful in a variety of ways: It lowers government revenues, leads to higher taxes by other taxpayers, places small and medium enterprises at a disadvantage, and increases industry concentration).
Effective tax rates indicate how much multinational corporations actually pay in corporate income taxes. Effective tax rates are also, according to Petr Jansky, part of the most straightforward answer to the 1997 ECOFIN criteria for identifying potentially harmful measures, which include “an effective level of taxation which is significantly lower than the general level of taxation in the country concerned.”
In contrast to the profit-shifting scale or effective tax rates, the EU list of noncooperative tax jurisdictions — that is, the blacklist — does not, in its current form, provide an adequately informative answer to the question of which countries are responsible for harmful tax practices outside the EU.
You can watch the complete recording of the discussion, including specific numbers and examples here: https://bit.ly/2VqAmYz
P. Jansky’s presentation starts at 9:08.
An article, which is Petr Jansky’s adjusted commentary on the presentation, was also published in Tax Notes International and you can read it here.
Javier Garcia - Bernardo, Thomas Tørsløv, Alex Cobham and Miroslav Palanský are also among the researchers, whose work was cited in the presentation, so if you are interested in the topic of harmful tax practices, we recommend to follow their accounts on Twitter.
Autor - Barbora Holková