The tax landscape is changing. There is a lack of trust in large business and a concern that globalization has benefitted large companies rather than the population at large. The concern is particularly acute around the taxes paid by the largest companies. As governments in the EU and EFTA strive to balance the need to raise revenues with a desire for a tax regime that attracts and retains business and encourages it to grow, a broad range of stakeholders is asking whether companies are paying their ‘fair share of tax’.
There is limited data to inform the debate over the contribution of large business in taxes. Besides taxes that companies pay as taxpayers, they are also responsible for collecting taxes on behalf of for instance their employees, clients, and service providers, and pay them to governments. However, there is little visibility over these other business taxes.
In order to collect relevant data to help inform the debate, the EBTF commissioned in 2018 the European Union (EU)/European Free Trade Association (EFTA) Total Tax Contribution (TTC) Study. The purpose of the study is to raise awareness and aid understanding of the contribution of large business in the EU and EFTA.
The study follows PwC’s TTC framework; an established methodology that allows organisations to measure all the taxes that they pay, the taxes they collect on behalf of governments, and other contributions they make to the wider economy. The framework applies to any tax regime and, as used in other studies (e.g. the UK 100 Group Total Tax Contribution study) has been discussed with governments and other stakeholders around the world. PwC acts as a ‘black box’ ensuring anonymity of data and building of a robust database.
The EBTF invited 130 of the largest companies in the EU/EFTA, measured by market capitalisation and revenue to participate. The study attracted strong interest with over half of the invited companies attending a web-conference to find out more about the study, with 41 companies finally participating in the study. The study collected TTC data on participants’ tax payments in the EU/EFTA for accounting periods ending in the year to 31 December 2018. The countries selected by each company to provide TTC data cover, on average, 96% and 94% of the turnover and the number of full-time equivalent employees of their EU/EFTA operations, respectively. The scope of the study was restricted to operations in EU/EFTA in the first year to ensure that the project was achievable in a reasonable time frame. It is intended that the study is repeated and extended to include other territories in the future.
Total tax contribution – A study of the largest companies in the EU and EFTA – Full report
Total tax contribution – A study of the largest companies in the EU and EFTA – Key results
Interested in finding out more about the 2019 EU/EFTA TTC study? Please contact us at firstname.lastname@example.org.