Why is fair tax better
OBS study suggests "tax seal" for fair companies
04.05.2018 – 11:20
Otto Brenner Foundation
+++ No clarity when it comes to payment and hardly any transparency when it comes to avoiding taxes in Germany +++ State losses through tax avoidance by multinational companies amounting to at least double-digit billions +++ Avoidance options favor large, multinational companies over smaller companies +++ Study identifies legal gray areas and discusses civil society alternatives +++ high-profile experts propose a "tax seal" as an instrument +++ seal informs the public, but is also intended to increase pressure for sustainable solutions +++
According to a study by the Otto Brenner Foundation on "Corporate Tax in Germany", companies are not taxed equally and according to their economic performance. A central finding of the empirical study is, however, that insufficient information is publicly available for a comprehensive comparison of fair tax payments and aggressive tax avoidance. There are differences between companies: Some groups (Hugendubel, Lidl, Rewe, Aldi and Amazon) maintain subsidiaries in tax havens to which no economic activities can be assigned due to the available data. Other companies, however, voluntarily publish additional information about their tax payments. Overall, the extent of corporate tax avoidance practices, according to another result of the study, can currently only be assessed by civil society actors with considerable effort (e.g. thanks to research projects such as the Panama and Paradise Papers). The result is that the unsolved problem of tax payment and tax avoidance is left to negotiation between business experts and national tax authorities.
The tax leeway of the individual companies, which has been identified on the basis of an empirical analysis of diverse data, is the reason to propose a "tax seal" for fair (company) taxpayers as a first step. The authors of the study develop and check the seal criteria. They come to the conclusion that such a seal can neither replace legal measures nor the work of the tax auditor. In the opinion of the tax experts, there is still a need for further development in terms of concrete implementation. On the other hand, they see the seal as a first effective instrument to better assess the tendency of specific companies to aggressive tax avoidance and to make positive efforts of companies publicly visible. The foundation and the authors of the study are convinced that a seal helps interested citizens and committed civil society to form an informed opinion on the tax debate and can also increase the pressure to strive for and implement sustainable political solutions. It is important that the proposed and examined approach of the "tax seal" is only one step in a series of measures intended to ensure that corporate taxation functions properly. The study therefore puts forward further proposals for discussion that are aimed at politics, companies, science and the general public.
The empirical study deals with tax avoidance by companies in Germany. To this end, it analyzes forty German retail companies in the food, book and clothing sectors. It is tested whether companies with fair tax practices can be identified on the basis of publicly available information, before it is discussed whether the introduction of a seal for fair (company) tax payments in Germany is possible and sensible. For this purpose, the literature and the debates on corporate taxation are introduced, a catalog of criteria for evaluating tax practices is developed and this is finally empirically tested on selected cases. The study draws on a large number of publicly available data. For the investigation, among other things, company registers were viewed and annual financial statements of the companies were evaluated.
The study "Corporate Tax in Germany. Legal Gray Areas and Civil Society Alternatives" was carried out by Christoph Trautvetter, Silke Ötsch, Markus Henn, funded by the Otto Brenner Foundation and was published there as Working Paper 28. The team of authors is involved in the tax justice network and is active for Attac.
Christoph Trautvetter, Silke Ötsch, Markus Henn: Corporate taxes in Germany. Legal gray areas and civil society alternatives, OBS working paper 28, Frankfurt am Main, April 2018 (http://ow.ly/PACL30jAr8i)
OBS managing director
Tel .: 069-6693-2810
Email: [email protected]
Original content by: Otto Brenner Foundation, transmitted by news aktuell
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