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By Ali Qbadim
EU lawmakers should stop relying on the political advice of the four largest
companies, given their status as "goliath of the world of tax planning", according to
independent watchdog Brussels.
Far from being "objective and legitimate" advisors in tax evasion, the Big Four
accounting firms – Deloitte LLP, EY, KPMG and PwCcq – help large companies
avoid taxes while directing the European Union on its political decisions,
Corporate Europe Observatory said in a July 10
report. Corporate Europe Observatory, a nonprofit, focuses on the power of corporate lobbying
in the EU.
The report focuses on corporate tax evasion, a major flash point in the bloc. the
Big Four gets special access and holds significant influence within the block, although
their interests are interested, according to the report.
Corporate tax evasion costs the EU between 50 billion euros (58.9 billion dollars)
70 billion euros each year, according to the report. The report signals the influence of
companies hold with lawmakers, as when the top four accounting firms pushed back
on EU proposals to compel companies to publish global tax reports.
"If we want companies to pay their fair share of taxes, we need to create a firewall
between the makers and the industry of tax evasion, "said Vicky Cann,
the Corporate Europe Observatory said in a statement. "There is an inherent conflict
of interest when Big Four sell corporate tax evasion plans and simultaneously
get advice on the EU's fight against tax evasion. "
The publication of the report comes a little over a month after the EU finance ministers formally
approved controversial rules that will require accountants and other tax professionals
report aggressive tax planning arrangements to national tax authorities.
The law on the declaration of tax intermediaries should enter into force on 1 July 2020.
PwC and KPMG declined to comment. EY and Deloitte have not responded to requests for comment
Influence is not benevolent
The European Commission continues to distribute the four million euros in public
money for tax consulting services, the report said. This is despite the fact that leaks
like LuxLeaks, the Panama Papers and the Paradise Papers revealed the reach of multinationals
tax evasion, the report said.
"Their channels of influence are numerous and profound, yet decision-makers seem blind to their
conflicts of interest, unable to see the Big Four as private interest groups
diaries even when this is apparent from the positions of the lobby vehicles that they
use, "said the report.
Companies "sell and profit" from plans that deprive the government of tax revenues,
the report said.
They "thrived in a culture of policy making that allows them an opaque but ubiquitous
presence. They are behind the scenes, seemingly ubiquitous, but certainly not benevolent "
the report said.
A spokeswoman for the European Commission said the organization regularly asks for research
of consultants around the world. "Writing a study for us does not make anyone
our advisor, if that were the case, we would have many advisers. These are
only four of the thousands of companies doing studies for us, "she said.
Big Four activities do not allow them any "extra access" to public consultation
processes, and the European Commission treats companies "in the same way as any other organization
who can apply to tender calls, without exception, "said the spokeswoman.
Firewall Against Harm
The report calls on EU policymakers to create a firewall to protect against
"the harmful influence of vested interests of the tax evasion industry".
The protections should include: no longer give the four major public contracts for
studies and the introduction of stricter rules on the revolving door between tax intermediaries
and the European institutions.
"The idea that a constant exchange of staff between active private mega-companies
engage in the sale of tax evasion structures and the institutions responsible for
tax evasion could engender conflicts of interest just does not seem to be recognized, "
the report said.
To contact the reporter about this story: Ali Qbadim in London at
[email protected]
To contact the editors responsible for this story: Penny Sukhraj at
[email protected]
Copyright © 2018 Bureau of National Affairs, Inc. All rights reserved.
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