Google, Apple, Inter-IKEA Group and McDonald's would welcome more clarity and certainty about their tax liabilities in the EU, but they are concerned about the administrative compliance costs and reluctant to see tax data being made public. So said their representatives at a public hearing, held by Parliament's Special Committee on Tax Rulings II on Tuesday, to elicit their views on recent and upcoming proposed legislation on corporate tax.
MEPs were keen to hear the multinational companies' views on the proposed directive against base erosion and profit shifting (anti-BEPS), which follows an agreement struck at OECD and G20 levels. They specifically asked about the proposed requirement for country-by-country reporting of profits, taxes and subsidies and whether such information should be made public.
But the anticipated common consolidated corporate tax base (CCCTB) and company specific tax structures - such as Google's “Bermuda” structure, IKEA's “royalties” one, Apple's tax arrangements in Ireland and McDonalds' franchises – were also subject to intense debate.
Several MEPs criticised Google for paying too little tax in EU countries and said that its deal with the UK revenue service (HMRC), whereby it will pay £130m in back taxes and higher ones in future, shows that Google was ethically off track. Its Head of Economic Policy, Adam Cohen said that HMRS had looked into its transfer pricing arrangements and concluded that certain benchmarks needed to be adjusted. "That is normal for multinational companies", he underlined, adding that Google pays a global effective tax rate of 19% and that the EU's overall rate is around 20%.
Google has reservations about the Commission's Common Consolidated Corporate Tax Base (CCCTB) plans, which - Mr Cohen said - would increase costs for Google as it would require an establishment in every EU country. "This would be contrary to the principle of the internal market", he added.
"Apple is the largest taxpayer in the world. In 2015 we paid 13.2 billion dollars in taxes worldwide, which is an effective tax rate of 26.4%", its representatives said when asked about the company's tax structures in Europe and the state aid investigation launched by competition Commissioner Margrethe Vestager. However, they were not prepared to disclose its EU and Irish tax figures. "Those are confidential. When country-by-country reporting will become mandatory, we will of course follow". Apple, like Google, pays most of its taxes in the US, where most of its employees are based and its research is done.
McDonalds' Vice President for Corporate Tax Irene Yates welcomed the anti-BEPS proposal, saying it would create a "clearer, simpler and more consistent international tax regime". But “we are concerned about unilateral approaches [that will result] if the BEPS directives arel not harmonised in a holistic manner. The idea should be to remove barriers to trade, not create new ones", she continued, adding that McDonalds is not in favour of public reporting by country: "Information should be kept confidential between tax authorities and not be made public. That could harm competition", she concluded.
Inter-IKEA Group CEO Soren Hansen, came under fire from the Greens, who had presented research on the basis of which they accuse the company of dodging tax through royalty operations via the Netherlands and Liechtenstein. Mr Hansen said that some of the assumptions upon which the report was based were false, but that he would come back with a written assessment of the research. He also said that the anti-BEPS proposal should be aligned inside and outside the EU, that bureaucracy must be avoided and that a mechanism for rapid dispute settlement would be highly welcome.
In the chair: Alain Lamassoure (EPP, FR)