EU plans tax transparency clampdown
24 March 2015
Posted by: Author: BBC News Business
Author: BBC News Business
The European Commission has laid out plans to clamp down on so-called sweetheart tax deals between governments and multinationals.
The Tax Transparency Package proposes that European governments automatically exchange details of tax rulings to try to tackle "aggressive tax planning".
Each country would have to declare all its tax rulings every three months.
The move comes during ongoing investigations into a number of member states' tax regimes.
Luxembourg, Ireland and the Netherlands have all been put under the spotlight.
Belgium's tax deals are also under scrutiny. The Commission is investigating whether the tax regimes of the EU nations amount to state aid.
Allegations also emerged last year that around 340 multinational companies had tax avoidance deals with Luxembourg.
Among the companies accused of signing "sweetheart deals" with Luxembourg to avoid billions in taxes in other countries were Pepsi, Amazon, Ikea, Microsoft, Disney, Skype and Fiat.
The Commission's plans for tackling corporate tax avoidance involve a proposal for a new law on tax data-sharing.
"Everyone has to pay their fair share of tax," said Commission vice-president Valdis Dombrovskis.
"This applies to multinationals as to everyone else. With today's proposal on the automatic exchange of information, tax authorities would be able to better identify loopholes or duplication of tax between member states."
The Commission is concerned that tax rulings which give a low level of taxation in one member state can entice companies to artificially shift profits there, leading to serious erosion of possible tax revenues for other member states.
While avoiding tax is not illegal, people are running out of patience with corporate tax avoidance, said Pierre Moscovici, Commissioner for Economic and Financial Affairs.
"Tolerance has reached rock-bottom for companies that avoid paying their fair share of taxes, and for the regimes that enable them to do this," Mr Moscovici said.
"We have to rebuild the link between where companies really make their profits, and where they are taxed," he added.
This article first appeared on bbc.com.