The International Monetary Fund (IMF) advised developed countries on Monday to raise taxes on companies with excessive profits to help mitigate this crisis. As the economy once again looks into the abyss due to the war in Ukraine and the energy crisis, on Wednesday the Revenue Agency released a report showing the fiscal effort of Spanish multinationals around the world. The 124 companies with a turnover of more than 750 million euros paid an effective global rate of 16.7% of their profits in corporate tax, according to data released by the Treasury for the year 2019. 16.7% paid by Spanish multinationals in 2019 for their global profits is even lower than the previous year when they paid taxes on 18.3% of their profits.
This tax rate is far from the nominal corporate tax rate in Spain, which is set at 25% for most companies and 30% for banks and oil companies. The difference lies in the complex system of deductions and exemptions enjoyed by Spanish multinationals in some jurisdictions and in the tax engineering they perform to legally transfer profits from some countries to others that offer greater tax advantages.
Information released this Wednesday reveals that large Spanish groups have paid a total of € 14,965 million in corporate tax globally, after recording a profit of € 89,701 million, according to data collected by the Revenue Agency. of the Country by country report (CBC, in its acronym in English), a declaration that these companies must submit with the data of their activities and tax payments in all the countries in which they have activities. The Treasury has been publishing this batch of tax data for four years. This information is based on the commitment signed by Spain with the Organization for Economic Co-operation and Development (OECD) under the BEPS (Base Erosion and Profit Shifting) project. It is an ambitious plan that has been signed by more than a hundred countries that seek to make the large companies where they do business pay taxes. As a result of this international project, an agreement signed by more than 130 countries was reached last summer to establish a minimum type of enterprise of at least 15%.
The 124 Spanish multinationals declared that they have 14,753 branches (9,810 are foreign). These added a global turnover of 933.842 million in 2019, according to information they declared to the treasury. To take into account the volume of total revenues collected by these delegations around the world from the Spanish parent companies, they represent almost 75% of the Spanish GDP in the same year. The information published by the Treasury does not allow to know the name of the companies, not even in which countries the branches are located, so it is difficult to draw much more conclusions than the difference in taxation in Spain and abroad. However, the Revenue Agency has this data which it uses for tax control.
In Spain they pay less
Official statistics show great divergence between groups of companies. One in three large Spanish companies paid taxes for less than 10% of their global profits. The 23 multinationals that contributed the least paid only 2.6% of their global profits in corporation tax. These companies represent 18% of all Spanish multinationals, but accumulate 20.8% of sales, 17.2% of the overall global profit, 22.2% of the total workers of all these companies and collect 14.7 % of the capital.
He knows all the sides of the coin in depth.
“In the statistics we can also see how, according to what was declared by the companies of the Country by country report (CBC, the effective rate paid in Spain by 124 multinationals in 2019 stood at 13%, or almost 8.5 points less than the amount paid by the same group in non-EU countries (21.4%) ” , as explained by the Inland Revenue Agency in Country by country report. The Treasury explains how Spanish business groups concentrate more than half of their global turnover (55%) in Spain, while a third comes from countries outside the European Union. Conversely, these companies claim that in Spain they only get 42.9% of their profits and pay 33.3% of the global corporation tax.
A minimum rate of 15% in corporate tax
Sánchez’s government has proposed since joining La Moncloa to set a minimum rate of 15% in corporate tax. After the 2008 financial crisis and the 2012 sovereign debt crisis, the public coffers ran out. The collection of businesses has halved and the debate on the contribution of businesses has intensified. After several attempts, the Minister of Finance, María Jesús Montero, managed to insert that minimum tax of 15% in the general state budgets of 2022. But that limit applies to the tax base and not to the accounting result. The average effective rate paid by these companies on the tax base is 21.5%, according to the latest official statistics. If the calculation is made on the benefit, the rate drops to 9.5%, because it includes the dividends of foreign branches, where they already pay, and other concepts.
The difference means that it affects only less than 1% of all Spanish companies, around 12,000, according to calculations from Treasury sources. So the effect will be limited for the public treasury.