The Troika’s secret agenda: Not saving Greece, but saving the capital of multinationals
On a daily basis Greece is being accused of a lack of willingness to reform, including tackling tax evasion and avoidance. In March, however, Greece introduced several measures to improve tax collection and to counter tax evasion and avoidance in a structural manner. But the Troika itself has asked the Greek government to repeal these same measures. In doing so it is practicing the opposite of what it is preaching.
In other words, the Troika and several European leaders are guilty of doublespeak. They are criticizing the Greek taxpaying ethic, meanwhile opposing any Greek measure aiming to restrict tax evasion by multinational enterprises and capital flight.
On March 21th 2015, a new law (4321/2015) was published in the Greek Official Gazette, addressing tax evasion and avoidance committed by multinationals. This law introduces a withholding tax of 26% (equal to the rate of the company tax) on transactions with tax havens or transactions with letterbox companies that have been set up precisely to avoid taxes in Greece. If one can prove that no letterbox companies were involved, it is possible to recover the withholding tax within three months(1). Criticism from the big financial consultant companies followed soon thereafter. KPMG reacted in March: “Greek legal entities will finance the Greek State at no interest cost to the State, using capital to which they already have difficult access, channeling liquidity away from further development in Greece.”
Fact is, the Netherlands and Luxembourg, among others, have been facilitating tax evasion through multinationals since the financial crisis. Almost half of all foreign capital in Greece is being diverted through the Netherlands and Luxembourg, mainly through letterbox companies. The Netherlands play a particularly important role in capital flight from Greece. The capital stock from Greece in the Netherlands increased from 3% before the crisis to almost 16% after the crisis.
The Troika document ‘Actions to be taken in consultation with EC/ECB/IMF staff’ (June 26th 2015) was the last proposal to Greece before the referendum. It shows the intention of the Troika to reverse these measures. Even more remarkable: simultaneously, the Troika is asking the Greeks to raise the corporate tax rate from 26% to 28%. This means, in fact, that they are demanding a higher tax rate for the local Greek companies, but are ignoring tax evasion by multinationals.
This much is clear, Luxemburg and the Netherlands are facilitating tax evasion from Greece by multinationals with disastrous consequences for the Greek public budget and the Greek citizens. We can ask ourselves the question to which extent the governments of Luxemburg and the Netherlands insisted on this.