World

Can new EU corporate tax rules make big business pay its fair share?

Published

1 year ago

January 7, 2024

Can new EU corporate tax rules make big business pay its fair share?

A landmark global deal setting a minimum corporate tax rate of 15% on multinational companies came into force in the European Union on 1 January.

The EU has for years tried to flex its muscles on corporate tax evasion by introducing a raft of new laws and lodging high-profile court cases against multinationals.

But some of its own member states – such as Ireland, Luxembourg and Cyprus – have continued to allow high-profit companies to dodge both taxes and scrutiny. Profit shifting worldwide has also remained high, causing losses worth billions of euros for the continent while economic inequality deepens.

Now, companies with revenues of at least €750 million active in any of the 27 EU states will face a minimum corporate tax rate of 15%. The bloc’s economy commissioner Paolo Gentiloni described the new year rules as “a new dawn for the taxation of large multinationals”.

The move is part of a sweeping overhaul of the global tax system agreed by some 140 Organisation for Economic Co-operation and Development (OECD) countries in 2021 after a decade of negotiations, and aims to crack down on governments that slash their corporate tax bills to attract investment.

Other countries such as the UK, Norway, Australia, Japan and Canada are also implementing the measures.

While the new interlocking rules have been hailed as groundbreaking, experts told Euronews there is a need to close crucial loopholes to ensure big business is held accountable.

A ‘revolution’ in tax justice

The OECD deal consists of two pillars, the first of which aims to ensure companies pay tax where they do business. The second pillar sets the global minimum tax rate of 15%.

In an interlocking system hailed revolutionary, if one country fails to tax a multinational at this rate, other countries can charge a so-called “top-up tax”.

This does not mean EU countries will necessarily adjust their corporate tax rate to the 15% baseline, since other countries will be able to step in to collect the taxes due from multinationals that pay their levies in low-tax jurisdictions.

This means that in a hypothetical scenario, a French multinational operating in Senegal and shifting its profits to Ireland could see either France or even Senegal charge a top-up tax if it doesn’t pay the minimum rate of 15% in Ireland.

“The concept is revolutionary,” according to Quentin Parrinello, a senior policy adviser at the EU Tax Observatory.

“It’s the first time we have more than 140 countries, including all major economic actors, agree that multinational companies should pay a minimum amount of tax on the profits it reports.”

“There is, in theory, no incentive for a country not to apply the minimum tax because if they don’t, another country will get the tax revenues,” Parrinello added.

Most EU countries have already transposed the EU Directive – that makes the new rules a reality – into law. Five countries – Estonia, Latvia, Lithuania, Malta and Slovakia – have informed the European Commission that they will delay implementation as they have fewer than twelve affected multinationals operating within their borders.

Too many loopholes

But despite its promise, experts fear the reform alone cannot stamp out tax havens or prevent a so-called ‘race to the bottom’ of harmful tax competition between governments.

States can still abide by the new minimum rate whilst offering generous tax credits and other deductions that effectively reduce the tax rate below 15%. Many states are already introducing attractive transferable credits, grants and subsidies to compete for investment.

“We already see this, for example with the IRA (Inflation Reduction Act) in the US. We also have countries such as Ireland, Switzerland, and the Caymans already thinking of their own systems,” Parrinello explained.

Another loophole in the deal allows firms to exclude certain amounts of profits – equal to 8% of the value of tangible assets and 10% of payroll in the first year – from the tax base.

The EU Tax Observatory estimates that this loophole could cost the EU some €26 billion in its first year of implementation. A loophole-free 15% minimum tax could have raised around $95 billion (€87 billion) in the bloc in 2023, the watchdog says, dropping to just $67 billion (€61 billion) with the current design.

“There will not be an end to harmful tax competition and the race to the bottom on taxation,” Chiara Putaturo, Inequality and Tax Policy Advisor at Oxfam’s EU office, said.

“We are seeing a lot of countries like Ireland, Switzerland and also Bermuda changing some of the tax systems they had before to introduce generous refundable tax credit so that they will still be able to have a lower and lower tax rate,” she added.

“The minimum tax is a floor,” Parinello said. “It’s much better to have a floor than nothing. But if you drill holes in the floor, you weaken the overall structure.”

World should move in lockstep

The OECD-designed system is unique in the way it incentivises all world nations to move in lockstep. Countries infamous for attracting giant companies with attractive tax incentives – such as Barbados and Panama – are also signatories.

An overwhelming majority of Swiss voters (78.5%) also backed the new rules in a consultation last June, putting pressure on their government to swiftly adopt the rules.

The US and China have not yet passed the necessary legislation but are likely to be incentivised to do so to ensure other countries do not top up their own tax collections at their expense.

But Putaturo warned that the 15% rate, which is lower than the global average, lacks ambition.

“The majority of countries, globally, have an effective tax rate which is higher than 15%. So this could even bring some countries to lower their tax rate, in a race to the minimum rather than a race to the bottom,” Putaturo explained.

“The minimum tax also does almost anything in terms of the redistribution of tax revenues. The so-called resident countries, where multinationals are headquartered, will have the right to top up the tax to 15% if the tax haven does not collect the tax due. This is a problem for poorer countries because the resident countries are mainly rich countries,” she added.

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World

Prada offers savage, instinctive menswear during Milan Fashion Week

Published

1 hour ago

January 19, 2025

Press Room

Prada offers savage, instinctive menswear during Milan Fashion Week

MILAN (AP) — Miuccia Prada and her co-creative director Raf Simons described the latest Prada menswear collaboration unveiled during Milan Fashion Week on Sunday as raw and cinematic.

While the Milan Fall-Winter 2025-2026 runway was full of faux fur collars, Prada went the usual step beyond and created primitive detailing in shearling that looked almost torn from the beast and set askew on outerwear lapels, or patchworked into garments.

“Maybe, it reads as savage, primitive cavemen. I think that our aim was to make it feel warm and human and instinctive, but also kind of beautifully domestic in a way,” Simons said backstage.

A model wears a creation part of the men’s Prada Fall-Winter 2025-2026 collection, that was presented in Milan, Italy, Sunday, Jan. 19, 2025. (AP Photo/Luca Bruno)

Collection hallmarks

Cinematic references were broad and not specific to any film, director or even character type, Simons said. Western touches included scuffed cowboy boots and knitwear mimicking a wrangler’s shirt – without creating characters or caricatures.

Feminine touches flourished. Men were invited to wear jewelry, such as bracelets with mini basketballs or baseballs. Chains with amulets hung from fine knits. Fake fur-lined hoods came in florals.

The silhouette mixed skinny trousers, often in bright rock-and-roll satin, with more ample volumes like pajama tops or slightly ratty sweaters. Suits required no shirts, as the designers advocated instinctive dressing.

One look seemed to distill the collection to its boyish essence: Straight leg jeans with a knit top featuring striped detailing, worn with floral-stamped cowboy boots.

A model wears a creation part of the men’s Prada Fall-Winter 2025-2026 collection, that was presented in Milan, Italy, Sunday, Jan. 19, 2025. (AP Photo/Luca Bruno)

Fashion as meaning

The designers said the collection was meant to offer hope in difficult times, proffering humanity as a form of resistance to whatever may be oppressing.

“It’s a bit of an answer to what of course is happening. We have to resist with our instinct, with our humanity, with our passion, with our romance,’’ Prada said backstage. Good work, she said, is also a form of resistance.

The message contained in the collection “has to be optimistic by definition and in principle,’’ Prada said.

The Setting

The ever-transforming showroom inside the Prada Foundation’s Deposito contemporary art space was sheathed in Art Noveau carpet, and the runway was set on raised metal scaffolding. Simons said it represented contrasts, decoration and a work-in-progress.

Trend watch

Suits require no shirts. Two puffers are better than one. Raw shearling collars let loose primitive instincts. Subtle jewelry and florals for men. Cowboy boots.

Louis Partridge arrives as he attends at the men’s Prada Fall-Winter 2025-2026 collection show, that was presented in Milan, Italy, Sunday, Jan. 19, 2025. (AP Photo/Antonio Calanni)

William Gao and Olivia Hardy arrive as they attend at the men’s Prada Fall-Winter 2025-2026 collection show, that was presented in Milan, Italy, Sunday, Jan. 19, 2025. (AP Photo/Antonio Calanni)

Sebastian Stan arrives as he attends at the men’s Prada Fall-Winter 2025-2026 collection show, that was presented in Milan, Italy, Sunday, Jan. 19, 2025. (AP Photo/Antonio Calanni)

Star power

Prada’s front row hailed from across the globe and disciplines, including British actor and musician William Gao, arriving with British musician Olivia Hardy, U.S. actor Keith Powers, South Korean actress Kim Tae-ri, Chinese table tennis player Ma Long and British actor Louis Patridge. A crowd of fans waited just beyond a barricade to cheer them all.

World

Bittersweet rejoicing as first hostages return to Israel after 471 days in captivity

Published

2 hours ago

January 19, 2025

Press Room

Bittersweet rejoicing as first hostages return to Israel after 471 days in captivity

In the first images of the three hostages Romi Gonen, Doron Steinbrecher, and Emily Damari being released to the Israeli Defense Forces on Sunday after their long captivity by Hamas, their faces told a story of resilience. After spending 471 days as prisoners, all three women were able to walk unaided from Red Cross vehicles to waiting IDF officials, marking the first step in Israel’s historic cease-fire and hostage exchange agreement with Hamas.

The return of the three women was celebrated across Israel. Mandy Damari, mother of British-Israeli Emily Damari, said in a statement: “After 471 days Emily is finally home. I want to thank everyone who never stopped fighting for Emily throughout this horrendous ordeal, and who never stopped saying her name. In Israel, Britain, the United States, and around the world. Thank you for bringing Emily home. While Emily’s nightmare in Gaza is over, for too many other families the impossible wait continues. Every last hostage must be released, and humanitarian aid must be provided to the hostages who are still waiting to come home.”

In a live broadcast, Romi Gonen’s father, Eitan, recited the Jewish blessing “Shehecheyanu,” expressing gratitude for his daughter’s safe return. Meanwhile, her grandmother, Debora, voiced both relief and anguish: “I’ve waited for this day, this is the reason I live for, to see my granddaughter come home. But my heart is with the families still waiting. We must bring them all home.”

HAMAS RELEASES 3 HOSTAGES UNDER ISRAEL CEASE-FIRE DEAL

Former hostage British-Israeli Emily Damari and her mother Mandy hold a video call with Emily’s brother Tom Damari and other loved ones, on the day Emily was released from Gazan captivity in a hostage-prisoner deal between Hamas and Israel, in a handout photo on Jan. 19, 2025.

Ashley Waxman Bakshi, the cousin of Agam Berger—a young soldier still held captive—captured the mixed emotions of the day. “After enduring hell, we desperately needed a moment to breathe and smile,” Bakshi told Fox New Digital during a gathering in Tel Aviv’s Hostages Square, where thousands came together to witness the first phase of the deal. “But this is only the beginning. We must continue until everyone is home.”

Prime Minister Benjamin Netanyahu, who received real-time updates from IDF Coordinator Brigadier General (Res.) Gal Hirsch, described the moment as deeply emotional. “These three women have endured unimaginable darkness,” Netanyahu said on the call with Hirsch. “Today, they step into the light, free at last, thanks to the heroic sacrifices of our soldiers. We will not stop until every last hostage is returned.”

ISRAEL DEFENSE FORCES WILL RECEIVE HOSTAGES SUNDAY WITH EQUIPPED CAMPER TRAILERS AND COMFORTING SUPPLIES

The three released Israeli hostages, Emily Damari, Romi Gonen and Doron Steinbrecher, who had been abducted during the Oct. 7, 2023, attacks by Palestinian militants, exit a van before boarding an Israeli Air Force military transport helicopter near Re’im in southern Israel on Jan. 19, 2025, after a cease-fire and hostage-prisoner exchange deal in the war between Israel and Hamas was implemented. (GIL COHEN-MAGEN/AFP via Getty Images)

Israel’s President Isaac Herzog welcomed the three women with a message of hope: “Romi, Emily, and Doron—so beloved and missed—an entire nation rejoices in your return. This is a day of joy and comfort, and the beginning of a challenging journey of recovery and healing together.” Herzog also acknowledged the pain of families still waiting for news of their loved ones, pledging that Israel would not rest until all hostages were brought home.

The release of the hostages comes as part of a U.S.-Qatar-Egypt-mediated deal, in which Israel will release 90 Palestinian prisoners, some convicted of murder. Critics fear the potential security risks of releasing individuals involved in terror attacks that claimed Israeli lives. Defense Minister Israel Katz acknowledged these concerns, stating, “This is a moment of hope, but we must remain vigilant. We will not rest until all hostages are returned, alive or for burial.”

President Joe Biden reiterated his administration’s commitment to supporting Israel and ensuring the deal’s success, while acknowledging its complexity. “This deal must be seen through to its end. It falls to the next administration to continue this work, but today is a step forward.”

WHAT TO EXPECT AS ISRAEL-HAMAS CEASE-FIRE GOES INTO EFFECT ON SUNDAY

The deal, while sparking hope, also fuels anxiety about its durability and consequences. Critics question whether Hamas will honor the terms of the multi-phase agreement and express fears over the release of dangerous prisoners potentially reigniting violence.

Photos from the IDF’s preparations at the various sites and in the hospitals where the hostages will arrive (IDF)

The first phase of the agreement is set to last five weeks, with hostages and prisoners exchanged in carefully planned stages. By the 16th day, negotiations will begin for the second phase, focusing on the release of soldiers and young men, as well as the return of bodies. The IDF will maintain a presence in Gaza during this period, moving troops to a new security zone to oversee the deal’s implementation.

For the families of the 98 hostages still held by Hamas, Sunday’s events brought a glimmer of hope amid the pain. “We rejoice for the families reunited today,” Bakshi said. “But this is far from over. It’s just the beginning of a long journey to bring everyone home.”

Efrat Lachter is an investigative reporter and war correspondent. Her work has taken her to 40 countries, including Ukraine, Russia, Iraq, Syria, Sudan, and Afghanistan. She is a recipient of the 2024 Knight-Wallace Fellowship for Journalism. Lachter can be followed on X @efratlachter.

World

EU assembles 100-strong observer mission for Kosovo elections

Published

2 hours ago

January 19, 2025

Press Room

EU assembles 100-strong observer mission for Kosovo elections

NATO-led international peacekeepers known as KFOR said their 4,300-strong force will be assisted by more than 200 Italian troops during the election period.

An election observation mission has been set up by the European Union to oversee parliamentary elections in Kosovo scheduled for 9 February.

A team of 100 observers will monitor the elections, underlining “continuous EU support for Kosovo to further strengthen its democratic governance,” Nathalie Loiseau, the French member of the European Parliament who has been appointed as chief of the mission said.

She said the election will “showcase the plurality of Kosovo’s political landscape.”

In all, 27 political groupings will run for 120 seats in the parliament.

About 100,000 voters registered abroad have already started casting postal ballots.

The Serb minority has 10 secured seats in the parliament.

Ethnic Serbs make up about 2.3% of Kosovo’s 1.6 million population, according to a 2024 census. Serbs largely boycotted that census and have not accepted the figures, calling them too low.

Loiseau said the elections are being held “at a moment when democracies are questioned, sometimes under threat globally…so the importance of having a vibrant democracy in Kosovo has never been bigger.”

NATO-led international peacekeepers known as KFOR, who have increased their presence in Kosovo after last year’s tensions, said their 4,300-strong force will be buttressed by more than 200 Italian troops during the election period.

In September 2023, Serb gunmen killed a police officer and occupied an Orthodox monastery in an incident Kosovo blamed on Serbia, accusing it of organising a plot to grab its northern territory.

Kosovo again put the blame on Serbia for an explosion that damaged water and power supply systems in November last year.

Belgrade denied both accusations but tensions remain between the two neighbours.

Kosovo was a former Serbian province and declared independence in 2008, a move Belgrade doesn’t recognise.

Both the EU and the United States have urged both sides to implement agreements reached two years ago that include a commitment by Kosovo to establish an Association of Serb-Majority Municipalities.

Serbia was also expected to deliver on de facto recognition of Kosovo.