The magic of multinational

The magic of multinational


Would you buy a pound of toilet paper to more than $ 4,000? And a liter of apple juice for $ 2,052? And ballpoint pens for $ 8,500, plastic buckets for $ 972, $ 4,896 tweezers to one o'clock? Yet there are examples of transactions actually carried out by a few multinational companies, and not by purchasing managers suddenly gone mad. Let's talk about one of the most common and effective strategies to avoid paying taxes.

Welcome to the world of transfer pricing, a practice perfectly legal, but that can be exploited to evade taxation and "optimize" their tax burden. The transfer price indicates that to which multinational companies buy and sell products or services between their various branches.

The trick is simple. A company sells fruit juices in Italy, and at year-end achieves one million euro of profits, on which would be required to pay taxes. The company creates, however, a branch of convenience in a tax haven, and this branch - only on paper - sells a thousand liters of juice to the parent company in Italy to 1000 € per liter. Result: the branch in Italy has a million euro in more than budgeted costs, that goes to zero profits and therefore taxes to pay. The correspondent million profit in the branch office is now in the tax haven, where taxes are low or non-existent.

If you want to do more, just be a bit 'more cunning and sell the juice to 2,000 euro per liter and 1000 to make sure that the Italian subsidiary results in a loss, so being able to access aid, subsidies and contributions made available by the State to undertakings in difficulty. Subsidies that come from our taxes, those employees who have payroll deduction or by those of artisans and small businesses that unlike the multinationals can not use similar accounting tricks and tax. The same small businesses that suffer unfair competition from larger groups, taking advantage of those loopholes that can lower costs.

paraiso-fiscal

Those shown are simplified examples and extremes. Usually the excesses in transfer pricing ranging from 5 percent to 25 percent compared to those of the market, making it very difficult to detect such practices. Discover even more complex when they are related to intangible assets such as patents or trademarks. On the other hand armies of consultants are available to companies and the wealthiest of people, as well as organized crime, to move, hide and launder the authorities gigantic capital.

You can not do anything, then? On the contrary, the means to counter these phenomena there would be. One is the requirement of country by country reporting of accounting data of multinational companies, which now have to submit only aggregate data on their balance sheets. In this way, you can not know turnover, labor costs, profits and taxes paid in every jurisdiction in which they operate, allowing or at least facilitating abuses such as those described above. Another measure is the demand for a public register of companies, and in particular of their real owners, to counter the anonymity and boxes Chinese companies.

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On this last point, in recent months, the European Parliament voted overwhelmingly to demand the introduction of a public register which allows to show what the real owners of any business. The word now passes to the Council and the Commission, and will be crucial in the coming months, the thrust of the EU presidency, namely Italy.

In parallel, next to the Country by country reporting of financial statements and the public register, which serves an agreement on the European and then international, you could do very well on a national scale. For example, entering into public procurement conditions or at least a score of preference for companies that demonstrate a proper fiscal behavior, rather than have recourse to subsidiaries and branches anonymous and / or in tax havens and publish their financial statements according to each jurisdiction in which and operate in a transparent manner. Already today, a number of calls provide additional scores for companies that have a certification on the quality of its production processes or a greater attention to the environment. Why not do so in the area of ​​taxation? It 'possible that the State work with companies that get public contracts on the one hand and on the other evade taxes?

Forcing the use of POS and ATM for purchases over 30 € but not include penalties for those who do not appear for at least ineffective, to say the least. It is with these measures that you can think of to fight the great escape. A real transparency in the financial, tax and corporate is the key not only to counter tax evasion, but also mafias, corruption, money laundering economy. Europe, also because of the crisis, finally seems willing to move. If indeed there is the political will to change course, Italy can not afford to lose such a historic opportunity during its six-month presidency of the EU.

Andrea Baranes