Supplementations to the regulations on supplementary tax for companies in large groups

Mathias Tegnér (S)

Madam Speaker! This is not the first and probably not the last time we debate the law on supplementary tax. The Committee on Taxation's report number 6, which is titled Supplements to the provisions on supplementary tax for companies in large groups, concerns the law on supplementary tax that was voted through here last year. Even though the law has not actually been put into practice, it needs to be adjusted already now.

In my contribution, I intend to try to describe how we Social Democrats view taxes, how taxes can contribute to freedom, equality and growth, and how we imagine that specifically the supplementary tax relates to these rather large issues.

The background to the supplementary tax is the work that has been done within the OECD to stop advanced tax planning by ensuring a global minimum tax level for multinational corporations. This initiative has been accepted by the EU.

The legislation was created by the EU issuing a directive in 2022, the purpose of which was and is to implement precisely those model rules that have been developed within the framework of the OECD and G20. They are sometimes called OECD's Pillar 2. To implement the EU directive, the Riksdag decided on the law on supplementary tax just about one year ago.

The idea that large multinational corporations should pay at least 15 percent in effective corporate tax may seem simple, but in practice it becomes complicated. The idea is that the tax reporting of these companies should be consolidated, and if the effective tax rate is below 15 percent, it shall be topped up, normally in the country where the parent company is headquartered.

Supplementations to the provisions on additional tax for companies in large groups

On several occasions last year and this year, new administrative guidelines have been issued by the OECD which have changed the conditions for the law, which means that it now needs to be supplemented. That is why we are here today.

Madam Speaker! When the question was discussed almost exactly one year ago, our position was clear. We Social Democrats welcomed the OECD's work against tax evasion and aggressive tax planning. Fundamentally, it is important to take cross-border measures to stop tax evasion and avoid a so-called race to the bottom in corporate taxation. Such measures also contribute to increasing predictability and simplicity for companies. Therefore, the G20 countries' and the OECD's agreement on precisely these model rules is a welcome and important initiative.

This work is of great importance morally but also financially. The OECD estimates that between 5 and 10 percent of global tax revenues disappear in advanced tax planning - 5-10 percent! In that context, this proposal and its purpose become reasonable, precisely to ensure that large multinational corporations pay a fair share of their profits in tax, regardless of where they have their operations. The rules are therefore aimed at creating a lower limit for tax competition. It is an important task for right to be right and for all citizens and companies to do the right thing.

This is important for cohesion in our country and important for cohesion in Europe. It is actually important for cohesion globally, simply to maintain the trust between us humans, the trust between one another.

Madam Speaker! Principally, taxes are naturally something that is a national competence. We collect taxes to finance important activities, common utilities, goods and services or, as the chairman of the Committee on Taxation, Niklas Karlsson, expressed it here in the chamber last week: "Tax is the nursing assistant at the elderly home, the breakfast at the preschool and the midwife who delivers our children. Tax is the hip surgery, the national test and the school bus to school. Tax is trains, buses and public transport. That is how it hangs together. Tax is common financing of common affairs and a common welfare."

Taxes are also central to creating growth. For years, Sweden has subscribed to top-ten placements in various rankings for competitiveness, for example, the OECD's index. That type of index measures things such as infrastructure, health, education, higher education, and innovative power, so those who believe that competitiveness and growth are solely about individual tax rates are mistaken.

Sweden has shown that we are a knowledge-intensive nation that is at the forefront when it comes to innovation and digitalization. This is, of course, driven by people's innovative power, but it is supported by taxes. But, someone objects, there are countries with high taxes and low growth. And that is completely correct. High tax is not a miracle cure, but neither is low tax. Often, when one speaks of high tax, it is authoritarian countries that have high tax rates and low growth. And there are a number of authoritarian countries all around the world today, and through history there are also a number of communist countries that had high taxes and, over time, low growth. That is completely true. The problem in these countries is what the taxes went to. Often they went to financing different types of corruption. And, which is at least equally important, we know that an open dynamic economy is almost impossible to create and combine with authoritarian rule.

João Mangabeira, a Brazilian politician and social democrat, once said that freedom without democratic socialism is not freedom. But democratic socialism without freedom can neither exist.

That is why social democracy and communism are only historically related as a thought. In practice, they have nothing in common, because the entire essence of social democracy is human liberation, freedom. All people shall be able to choose their own path in life. As Hjalmar Branting expressed it, everyone shall be able to realize the longing of their highest aspirations, regardless of your parents' education, where you live, whether you are a woman or a man, if your grandmother was a domestic servant from Höganäs or if your grandfather was a letter carrier from Järna. All citizens shall be given the chance to fight to let their dreams become reality.

Taxes are not just figures in a budget document, but they are the very foundation of our social construction. For us Social Democrats, tax is a tool to create justice, to finance the welfare state and ensure that all people, regardless of background, get a reasonable chance to live a good and meaningful life.

That is why it is so, even if it can sometimes be difficult for the right to accept, that freedom can actually increase with taxes if, and only if, they are used for the right things and thereby contribute to a more equal and freer society.

This, Madam Speaker, is not just free-wheeling speculation, but we know that social mobility is higher in egalitarian countries. It is higher in every country here in Scandinavia than in, for example, the USA.

What do Hjalmar Branting and dreams of freedom have to do with the supplementary tax? Perhaps someone thinks. Yes, taxes are part of a system, a social construction. It is based on a general acceptance of the system and a mutual trust in one another.

In today's globalized world, inequality is increasing rapidly. A few buses of the world's richest people own as much as half of the earth's population. At the same time, we are fed stories about how certain companies do everything in their power to avoid taxes.

We are fed journalistic scoops like the Panama Papers about people with large assets who toil like galley slaves to minimize taxes. It tears our society apart. There are few things that make the blood boil so much for hard-working people as when successful companies and wealthy individuals do not do the right thing and are not prepared to pay their taxes.

In light of this, we Social Democrats believe that the supplementary tax can actually serve a purpose if it functions as intended, even though it is based on an international framework. We are therefore cautiously positive about something that can create fairness and stop unfair competition, which naturally occurs when honest companies are to compete with companies that do not pay their taxes. To that extent, we believe that the supplementary tax can be justifiable and fair if it contributes to fairness between different companies and furthermore that tax loopholes are closed.

Madam Speaker! Today, there is uncertainty regarding the implementation of the law on supplementary tax. Therefore, we believe there is value in a unanimous committee standing behind the bill, and that is something we Social Democrats have also done. But naturally, the tax must not entail a large administrative burden for companies that are already doing the right thing. Naturally, we must ensure that the law works and puts a stop to advanced international tax planning and tax evasion.

The worst outcome, Madam Speaker, would be if the tax results in additional burdens for companies that are already behaving themselves while the villains get away. Therefore, we must follow up on this law both carefully and in the near term, which was pointed out by several referral bodies when the bill was handled.

Unfortunately, the Tidögänget in the Committee on Taxation has rejected our initiative for an extra evaluation. We naturally regret this. Much indicates that there is an additional need for supplements to the proposal that is now on the table. We have described this in our special statement.

We assume that the government continues to review the legislation and corrects any deficiencies and inaccuracies, so that the companies' costs for the implementation of the legislation are as low as possible.

Furthermore, we Social Democrats maintain that the issue of representative liability needs to be analyzed. Not introducing provisions on representative liability implies a preferential treatment of small and medium-sized companies on one hand and large corporations on the other, to the disadvantage of the smaller companies.

Finally, Madam Speaker, I would like to regret that the Tidö government does not prioritize sufficiently the fight against tax evasion. The work on exit tax has been put on ice, the work on a modern withholding tax is paused, and the Swedish Tax Agency is no longer required to produce an annual analysis of the size of the tax gap in Sweden.

We Social Democrats deplore this carelessness that the right-wing government actually demonstrates.

For us, the law on supplementary tax is linked to work for fair taxes. A coherent, structured and stringent work against tax evasion is completely essential for our tax system to function and thus for the trust between Swedes to be able to increase.

With these words, Madam Speaker, together with dreams of freedom and equality, I move for approval of the committee's proposal for a decision in report SkU6 and thank you for having listened.

(Applause)

The speech at riksdagen.se, in Swedish (opens in a new tab)

Bo Broman (SD)

Madam Speaker! In December 2021, the European Commission presented a proposal for a global minimum tax for multinational companies within the EU. The proposal is based on the model rules that the OECD and G20 have developed. These rules aim to counter base erosion and profit shifting, that is, when companies move profits to countries with low tax levels in order to minimize taxation.

The EU's minimum tax directive, which was adopted in 2022, aims to ensure that large multinational corporations pay an effective tax rate of at least 15 percent on their profits. It is an important measure to create fair conditions in the global market and to protect our tax bases. The directive's rules are based on consolidated financial statements and are supplemented by detailed explanations and examples developed by the OECD and the inclusive framework, of which Sweden is a part.

In Sweden, we have already taken measures to implement the directive. On January 1 of this year, the law on additional tax for companies in large groups entered into force. This law is part of our effort to ensure that the global rules take effect even in our national legislation. But the work does not end there. Since the OECD's model rules were adopted in 2021, new guidelines and supplements have been developed. These include, among other things, administrative guidelines and simplification rules, so-called safe harbour rules, which aim to facilitate the interpretation and application of the regulatory framework.

In this report, further adjustments to the Act on Supplementary Tax are now proposed to ensure that the regulatory framework keeps pace with international developments. The proposals include, among other things, new provisions on how artificial arrangements shall be treated when calculating tax according to the simplification rules, how the deferred application of certain rules shall be handled, and how exchange rate issues shall be resolved. Furthermore, it is proposed that Swedish rules be adapted so that foreign national supplementary taxes can be credited during taxation in Sweden, for example, in the case of so-called CFC taxation or in the taxation of permanent establishments abroad.

Madam Speaker! It is important to emphasize why this work is necessary. Tax evasion and aggressive tax planning pose major threats to our society's ability to finance welfare and infrastructure. When large corporations move profits to low-tax countries or avoid taxation entirely, they leave a greater responsibility for financing the common good to small business owners and wage earners. This is not only economically harmful but also deeply unfair.

The international cooperation regarding minimum taxation shows that it is possible to reach agreements on solutions to create fairness and sustainability in a global economy. But it is also clear that this work is complex and constantly evolving. The Government has therefore emphasized that a continuous review of the regulatory framework is necessary. We must be able to adapt to new guidelines and ensure that Sweden's laws harmonize with other countries' so that the system functions as intended.

Madam Speaker! Ensuring a global minimum tax is a challenge but also an opportunity to strengthen confidence in our tax systems. It is a signal that we do not accept that the largest companies evade their responsibilities while ordinary citizens and smaller companies do the right thing.

Let us therefore adopt the proposal that is on the table and continue to work for a tax system that is fair, sustainable and robust - both in Sweden and globally. I want to conclude by moving for approval of the committee's proposal for a decision.

(Applause)

The speech at riksdagen.se, in Swedish (opens in a new tab)

Fredrik Ahlstedt (M)

Madam Speaker! Swedish global companies are of very great importance for the Swedish economy and growth. We elected members of Parliament have an important task in standing up for Swedish companies and giving them the best possible opportunities so that they can compete on the global market.

Swedish companies have a high reputation on the world market and are world leaders in many areas. They are known for their high quality in the services and products that are produced and delivered. Swedish companies also lie far ahead when it comes to the green transition, various sustainability ambitions and sustainability promises, and they stand out particularly when it comes to lowering carbon emissions. Many Swedish companies also work on strengthening the social dimension and ensuring good working conditions for their employees.

Competitiveness for Sweden and the rest of Europe is, of course, in many ways crucial for us to succeed in increasing growth. Sweden has had a deplorable development over the last eight to ten years in terms of economic growth. Here, Sweden really needs to sharpen up.

The introduction of a so-called global minimum tax is naturally good in principle because it creates a solid and fair basis for global companies to be able to compete on equal terms. Since Sweden has so many global companies, this is a bit extra important for us. Many of the Swedish companies are also the companies that often behave best and live up to these requirements. It is therefore important for Sweden that the conditions for all companies become good and equal. Competitive taxes and regulatory frameworks are naturally important to give companies the best possible conditions to be able to grow and create more jobs in Sweden and on a global level. The minimum tax is, as is known, set at 15 percent.

Madam Speaker! What then is right and what is the best level for the corporate tax in Sweden? This question perhaps requires a slightly longer reasoning on how Sweden should maintain and develop its competitiveness. Sweden is a relatively small country with an open economy that is constantly exposed to competition from other global markets and companies. The other global companies often have a much larger domestic market, for example, the American, German, French, British and Chinese companies. This makes Sweden more vulnerable than many other countries.

Sweden has over the last 30 years continuously lowered its corporate tax to increase competitiveness. It has probably played a very large role for Swedish companies that have been able to increase their market shares and have come to be better equipped in the global market. It has also meant that the investment climate has become better for Swedish companies in Sweden but also on the global market.

As I have mentioned previously, we face the challenge of creating greater growth in Sweden, both in the coming years and in the longer term. We must find ways to get the Swedish economy to start growing. Taxes are part of that, but there are naturally other parts. If the economy grows, we get the opportunity for more investments in both the private and public sectors. It gives us the opportunity to continue strengthening the justice system and the defense and to manage the green transition. It is in the companies that everything begins. If we are to have anything in common to distribute, the economy must start growing again.

Furthermore, I believe that the corporate tax needs to be adjusted or perhaps lowered further so that Sweden can continue to be an attractive country to invest in and to get people to come here and make investments. Our economy is relatively small, and we need to have an attractive system.

Madam Speaker! Today we are addressing supplements to the provisions on the supplementary tax for companies in large groups, which in themselves are based on the proposal on global minimum tax and the Council's directive. These directives are based on the model rules that have been developed within the framework of the cooperation in the OECD. The global minimum tax shall be 15 percent for national and international companies that have an annual revenue of at least 750 million euro, which is just over 8.5 billion Swedish kronor.

We have introduced the law on national top-up tax for groups that do not succeed in paying an effective tax of 15 percent. The top-up tax will be paid in Sweden by those groups that cannot demonstrate that they have paid an effective tax of 15 percent.

Supplementations to the provisions on additional tax for companies in large groups

The additions that are now being made are to ensure that the law meets the conditions to be an approved regulatory framework for national supplementary tax. The additions are of a more administrative nature and concern, among other things, currency issues, simplification rules, deferred application, and settlement issues. With this bill, companies will receive increased clarity and greater opportunities to be able to comply with laws and regulations in a correct manner.

Madam Speaker! I hereby move to approve the committee's report SkU6.

(Applause)

The deliberation was hereby concluded.

(Decisions were made under § 14.)

The speech at riksdagen.se, in Swedish (opens in a new tab)