The Guardian view on taxing big business: let’s end the race to the bottom | Editorial
The sentence that follows may be among the rarest in British newspapers, but here goes. A big hand for the European commission for doing an excellent thing. This week, the commission ruled that Belgium has been granting an illegal tax break to at least 35 global companies. The Belgian government will now be forced to recover the unpaid taxes - equivalent to about 530m - from the companies. Last October, it was Luxembourg that was in the firing line - ordered by the commission to recover up to 22.5m from a subsidiary of Fiat. The Netherlands also ran into grief last year over a deal it made with Starbucks. All three countries have been caught out by a series of investigations led by the EU's competition commissioner, Margrethe Vestager, into countries cutting special tax deals with massive multinationals. The EU is going after cases where member countries have granted individual tax breaks to big companies, without making them available to all the businesses there.
How much money is at stake? Consider Anheuser-Busch InBev, the largest brewer in the world, the manufacturer of Stella Artois and Budweiser among others, and capitalised on the stock market at $189bn. It has a Belgian subsidiary making profits of about 45m a year. Belgium's official corporate tax rate is 34%, which implies that the unit should pay about 15m a year in corporation tax. Instead it enjoys a rate of about 4% which brings its corporation tax payments down closer to 1.8m a year. Its parent company also has its headquarters in Belgium and, according to the New York Times, paid "a small fraction of 1% on its reported profit of " $1.93bn [1.34bn] in 2014".
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