THE Stormont Executive must be on its guard against "immoral behaviour" when it starts collecting its own business taxes, a high-level meeting in Brussels heard on Friday.
The annual loss of tax receipts in the EU due to tax avoidance, tax fraud and aggressive tax planning currently stands at one trillion euro (£700 billion), a Committee of the Regions (CoR) plenary heard.
This was described as a "œstaggering seepage of money" which is decimating public finances at all levels.
And when Northern Ireland has corporation tax-setting powers divested in April 2018, its 12.5 per cent rate is likely to attract corporations which may be lured simply in a bid to circumvent the existing legislation.
Europe believes the corporate tax legislation is no longer suited to the current economic context of globalisation, mobility, digital technologies, new business models and complex business structures.
And members of the CoR are now discussing ways to close tax loopholes, stamp out tax evasion and create a level playing field in Europe to stop the legal but immoral practices of multinational corporations profiting from tax regimes in certain regions while contributing little back to that economy.
The Committee of the Regions, which has 350 members, is the EU's assembly of regional and local representatives from all 28 member states.
Effectively the 'local council' compared to its European Parliament big brother, its mission is to involve regional and local authorities in the EU's decision-making process and inform them about policies.
The UK has 50 members of the CoR, of whom four are from Northern Ireland – Ards councillor Trevor Cummings (DUP), MLAs Fearghal McKinney (SDLP) and Megan Fearon (Sinn Fein) and former Assemblyman Arnold Hatch (Ulster Unionist).
Mr Cummings – who was the only one of the four to attend the latest plenary session – said: "Our view remains that having corporation tax powers in itself is not a silver bullet.
"But it's an imperative that there is an adequate, transparent and effective tax collection which is fair for all companies, and this would bring about significant reductions in the tax burden," he added.
CoR member and Manchester councillor Kevin Peel rounded on Amazon in particular during yesterday's meeting, citing it as an example of a company which could potentially look to a region like Northern Ireland to beat the tax system.
He said: "Amazon UK, as it has turned out, isn't really in the UK at all.
"You buy your goods on a UK website, pay in UK pounds, they're shipped from a UK distribution centre employing UK staff, yet the tax paid on the profits goes to Luxembourg, where Amazon pays less than 12 per cent tax on profits, about half the UK's corporation tax rate."
He added: "Inaction on this tax is not an option because the loss of public revenue plays a substantial part in deficit and debt levels of member states, which in turn is negatively affecting investment to create the jobs and growth we so desperately need.
"Indeed if this tax gap was closed entirely, the entire accumulated public debt of every EU government could be repaid in the next nine years."
