S&D Euro MPs today called on EU governments to find a sustainable solution to build a fair and efficient corporate tax system in Europe. The call came after the European Commission published a communication, which will be discussed by EU finance ministers next week.

S&D Group president Gianni Pittella MEP said:

“The current European tax system is outdated and is not up to the challenges of the digital economy. Billions of euros are lost every year due to aggressive tax planning from the largest companies in the world. Funds that could be used for education, healthcare or public infrastructure.

“The giants of the digital economy such as Google, Apple, Facebook and Amazon are making huge profits in the EU, but pay little or no tax.

“On average, domestic digital businesses are subject to an effective tax rate of only 8.5%, less than half that paid by traditional business models. Tax evasion and tax fraud on European soil are no longer acceptable. Everyone must pay their fair share of taxes to make sure our societies can function fairly.
“For the Socialists and Democrats, the best way to tackle these issues is to move towards a common corporate tax system.  We need to define digital permanent establishment rules, as our colleague Paul Tang has already proposed in his draft report on the common consolidated corporate tax base (CCCTB).
“We should be careful when using quick fixes that we do not lose focus and we must keep working on long-term solutions in order to reach an agreement on the CCCTB as soon as possible.”

S&D Group vice-president responsible for economic and monetary affairs Udo Bullmann MEP added:

“The Commission rightly emphasises the need for internationally co-ordinated initiatives. However, this must complement and not replace immediate European action. Our Group has made concrete and practical proposals to ensure digital business models are appropriately taxed and these would make the EU a frontrunner in this regard. We would welcome it if the Commission worked together with us to bring member states on board too.

“Europe needs a modern tax system that is fit for the 21st century. Turning a blind eye to the challenges digital business models pose would mean risking the integrity of our economic and social models, as well as the single market. Digital global players must be subject to the same rules as small businesses on our local high streets.”

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