In a country like Spain, with a deficit close to 3% of GDP and a debt that breaks all records, it is relevant to know that the tax losses resulting from tax avoidance were... almost 30 billion euros Between 2016 and 2021. And yes, this period includes when we were buying face masks and thousands of people were on furlough. So, we know the total amount of tax avoidance, but not the identity of the multinational corporations responsible. Why don't we know? Because of political pressure from these same companies, the complicity of some politicians, and the acquiescence of others.
Let's be clear: tax avoidance isn't illegal, but it generates social unrest. It consists of exploiting every loophole to reduce the amount of taxes owed. This is mainly done by registering income in low-tax countries, but also by lobbying to obtain—and take advantage of—all kinds of deductions, exemptions, and subsidies. Tax avoidance works based on attributes such as opacity, complexity, and non-cooperation. It's a well-known fact that those with the most power are the ones who take advantage. The problem with these practices is that they break the social contract and create resentment among those who don't have the same resources as before: small and medium-sized enterprises and the self-employed—now actively demanding an improvement in their situation—who feel squeezed by bureaucracy and taxes.
The fight against tax avoidance has long been waged on two fronts: establishing a global minimum tax of 15% and improving transparency. Although I anticipate that in the current context of increasing deglobalization and protectionism, these measures won't advance quickly, let's examine their status.
On the one hand, the global minimum tax, promoted by the OECD, aims to set a 15% tax rate for companies with a turnover exceeding €750 million in as many countries as possible. This measure would curb the tax race between states to see who can offer the lowest taxes. A competition that, incidentally, rarely works out well in the long run. In this respect, the European Union already did its homework in 2022, when it approved a directive guaranteeing that multinationals pay at least 15% in taxes in every country where they operate. Member states were required to transpose it into force within a year—with some exceptions—to give companies time to adapt. All have done so. But it doesn't all end with the corporate tax. In a scene from the wonderful series The diplomat A conversation between the Irish Prime Minister and a tech company that will no longer benefit from the country's low taxes as a result of this change appears as an aside. The politician proposes creating a tailor-made subsidy for this company's activities. It's fiction, but worth considering.
On another note, the Tax Justice Network proposes lifting the government ban on publishing the names of companies that use these practices. Their hypothesis is that simply making the names public would reduce the practice. According to their estimate, Spain could collect 1.6% of its healthcare spending, which is not insignificant.
The country with the most decisive policy in this regard is Australia. At the end of last year, it passed legislation requiring multinational companies operating within its borders to break down information by country regarding taxes, profits, and number of employees. This allows for determining whether the level of activity in each country is aligned with the taxes paid. It includes reporting on traditional tax havens, such as Switzerland and Singapore, which, it must be acknowledged, have taken small steps toward a partial implementation of a global minimum tax.
This increase in transparency is driven by the conviction that the measure will recover millions of lost public funds. The premise is that companies do not want to be exposed for engaging in questionable tax practices (remember that this is not illegal and, therefore, could not be prosecuted). It is purely a matter of reputation and image. And it seems that reputation is indeed important, because American multinationals have asked President Donald Trump to pressure the Australian Prime Minister to repeal this legislation. It's curious how some of the affected companies, like Facebook or Apple, which have access to a huge amount of our data, aren't so keen to return the favor with their own data.
