EU chief pledges action to boost corporate tax transparency

13 Jan 16

The European Commission’s top tax official has said countries have “looked the other way” in the face of serious tax avoidance and pledged to take action this year to improve transparency.

Speaking at a hearing on the European Parliament’s special committee on tax rulings and economic and monetary affairs on Monday, Pierre Moscovici said corporate tax reform and fiscal transparency should be top of the commission’s agenda this year.

Moscovici, the economic and financial affairs commissioner, promised MEPs he would present an ambitious anti-tax avoidance package by the end of this month, in addition to initiatives that are already underway.

However, he added the unanimity required on taxation issues in the EU might cause problems as certain member states how resistance to ambitious measures.

“We have a serious problem with tax avoidance and lack of transparency. Too many people have looked the other way,” he told MEPs.

Further efforts would be made towards establishing a common system for calculating the tax base of businesses operating in the EU and mandatory, public country-by-country reporting for multinational companies, Moscovici stated.

Country-by-country reporting would require companies operating in more than one jurisdiction to report profits made, taxes paid and subsidies received in each of the countries in which they operate, making complex schemes to shift profits from one country to another easier to spot.

The EU has recently been cracking down on tax avoidance by multinational companies and harmful tax practices by EU member states, such as the ‘sweet heart’ tax deals Belgium and the Netherlands and Luxembourg granted to certain multinational firms.

Following investigations, the European Commission has deemed all of the above as illegal state aid and ordered the collection of millions of Euros of unpaid tax.

At the hearing MEPs urged Moscovici that the tax recovered should not go to the “guilty” countries, but elsewhere as in other competition cases.

They also inquired about the feasibility of a minimum effective tax rate, but Moscovici stressed that was a “difficult” conversation to have with the EU Council. 

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