Tax dodging by EU companies and other transnational corporations is costing developing countries billions in lost tax revenues each year.

Report: Spotlight – on EU Policy Coherence: the real life impact of EU policies on the poor
 
READ the report here
 
(Brussels, 18/09/2013) Tax dodging by EU companies and other transnational corporations is costing developing countries billions in lost tax revenues each year, in addition to a €1trillion deficit in Europe, as a consequence of the EU’s lax approach to its own Lisbon Treaty obligations shows a new report published today by CONCORD, the European confederation of Relief and Development NGOs.
 
The report looks at how some EU policies negatively affect developing countries in the areas of financing for development, food security, natural resources and climate change.
 
The report comes as the EU and national governments are coming under increasing pressure to tackle tax havens. Just last week EU Commission President Barroso called for EU action on tax evasion and tax fraud on the world stage.
 
Findings:
 
• At least $859bn was lost from developing countries in 2010 alone through illicit financial flows. This is 13 times the amount the EU spent on development aid in 2012.
• In tax revenue alone, at least $100bn was lost from developing countries through insufficient international tax policies.
• The EU is not respecting its commitment to Policy Coherence for Development, a Lisbon Treaty obligation that aims to make sure EU policies do not undermine development objectives.
 
“Europe cannot continue to give aid with one hand and take away with the other and tax policy is a classic example of where it’s doing this. Billions go to poor countries in aid only to return again to rich countries via tax dodging. The balance sheet shows that the poor in developing countries are losing out here. According to the European Commission, tax evasion also costs the EU itself one trillion euros every year. This has to stop.” says Laust Leth Gregersen, Chair of CONCORD’s working group on Policy Coherence for Development.
 
The real life impacts of EU policies on the poor
 
Read the CASE STUDIES
 
The report follows the stories of four people from developing countries and the impact that incoherent EU policies have on their daily lives. One featured story from Caroline Muchanga, a market seller in Zambia, shows that she pays 90 times more corporate tax than the EU sugar company whose product she sells.
 
The EU’s record on Policy Coherence for Development
 
The EU remains the only region of the world to have a legally binding commitment to Policy Coherence for Development.*
 
“The EU is all talk when it comes to improving the record of its own policies for the benefit of the world’s poor. But years after encouraging commitments were made, little is being done in practice. The EU jeopardizes the development potential of many poor countries because of incoherent, short-sighted and self-centered decisions made at home. Candidates to next year’s EP elections and new Commissioners will have to answer on this.” says Rilli Lappalainen, CONCORD Board member.
 
As the reform of the United Nations Millennium Development Goals is being discussed right now, European decision makers need to stand up for fairer policies in the international arena too.
 
ENDS
 
Notes to editors
 
1. Between US$ 859 billion and US$ 1,138 billion escaped developing countries as illicit financial flows in 2010 alone. About half is profit shifting by TNC’s (US$ 429.5 to US$ 569 billion) = loss of at least $100bn a year in tax revenue to developing countries. Recent research by NGO ActionAid also shows that less than one in every two dollars of large corporate investment in developing countries is now being routed from or through a tax haven.
 
2. Caroline Muchanga sells a product of Zambia Sugar Plc, a subsidiary of UK food giant Associated British Foods, Africa’s largest sugar producer. From 2008 to 2010, Caroline paid more income tax in absolute terms than Zambia Sugar, which has managed to pay no corporate income tax. In the fiscal years 2010/11 and 2011/12 the company did pay some income tax, but even then at a rate of just 0.5% of its income which is 90 times less tax than Caroline pays relative to her income.
 
3. Illicit financial flows includes the proceeds from both illicit activities such as corruption (bribery and embezzlement of national wealth), criminal activity, and the proceeds of licit business that become illicit when transported across borders in contravention of applicable laws and regulatory frameworks (most commonly in order to evade payment of taxes).
 
4. *What is Policy Coherence for Development?
Article 208 of the Lisbon Treaty says: “The Union shall take account of the objectives of development co-operation in the policies that it implements which are likely to affect developing countries”. For CONCORD, Policy Coherence for Development is about ensuring that the aims and objectives of EU development cooperation are not undermined by other EU policies, such as those on climate, trade, energy, agriculture, migration, and finance matters.
 
5. Who is CONCORD?
CONCORD is the European NGO confederation for relief and development. CONCORDs 27 national associations and 18 international networks represent over 1,600 NGOs which are supported by millions of citizens across Europe. CONCORD leads reflection and political actions and regularly engages in dialogue with the European institutions and other civil society organisations. www.concordeurope.org
 
6. About the report
The report is the joint effort of European development NGOs and civil society organisations, coordinated by CONCORD. It follows reports in 2009 and 2011. The report includes three thematic chapters focusing on financing for development, food and nutrition security, climate change and natural resources. It also has a chapter assessing the institutional mechanisms in place for Policy Coherence for Development. A separate study published by CONCORD today looks at the mechanisms in place for Policy Coherence for Development across 17 EU Member States.
 
Media contacts: 
CONCORD Communications officer, Daniel Puglisi on +32 2 743 87 77, Daniel.Puglisi@concordeurope.org