Brightest minds in economics meet to tackle tax evasion and avoidance

The European Commission, in cooperation with the EU Tax Observatory, is hosting a three-day high-level conference on the consequences of global tax avoidance and evasion.

The digital event brings together academics, policy-makers and stakeholders, to both assess the magnitude of global tax avoidance and tax evasion, and find ways to address it. This topic is particularly important, as the EU is slowly recovering following the COVID-19 pandemic. As Commission President Ursula von der Leyen said in the 2021 State of the Union: “Asking big companies to pay the right amount of tax is not only a question of public finances, but above all a question of basic fairness.”

Some of the figures were startling – researchers found that close to 40% of the profits of multinational companies (MNEs) are shifted to tax havens each year, which benefits both low-tax countries and the shareholders of multinational companies who tend to be at the top of the income and wealth distributions. Discussions also highlighted research and data gaps that need to be addressed in order to shed further light on unfair global tax practices and to inform policy makers with science-based evidence.

Available studies have been instrumental in the push for the complete reform of the international corporate tax system, currently agreed among 134 jurisdictions and endorsed by G20 Finance Ministers and Central Bank Governors. Consisting of two pillars, the agreement will include a global minimum effective tax rate on multinationals’ profits of at least 15%, aiming to curb aggressive tax planning and stop the corporate tax “race to the bottom.” Moreover, it will prompt a reallocation of taxing rights to ensure the world's largest companies pay tax wherever they conduct business.

Commissioner for Economy Paolo Gentiloni said: “To fight tax avoidance and evasion we need relevant and usable data, maximum transparency and top-level expertise to inform our policy-making. This conference will contribute to that by bringing together some of the brightest minds in Europe and beyond.”.

In May 2021, the Commission published the Communication on Business Taxation for the 21st Century. This sets out a long-term vision to provide a fair and sustainable business tax environment in a single corporate tax rulebook for Europe - the “Business in Europe: Framework for Income Taxation” (BEFIT), as well as an ambitious tax agenda for the next two years. Targeted measures will include greater public transparency on the taxes paid by businesses, by proposing that certain large companies operating in the EU should have to publish their effective tax rates, and addressing the abusive use of shell entities for tax purposes.