On Friday, Juncker announced the Commission’s plan to propose a new directive on the automatic exchange of information about tax rulings between EU countries
The finance ministers of Germany, Italy and France have urged European regulators to tighten the EU’s tax rules in an effort to control corporate tax avoidance and prevent member states from attracting investors with lower tax rates. They also called on the European Commission to close tax loopholes, in a reference to the recent LuxLeaks tax scandal.
In a letter to Pierre Moscovici, the EU commissioner responsible for economic affairs and taxation, the ministers on Monday (01.12.2014) called on the EU to introduce “a set of common, binding rules on corporate taxation to curb tax competition and fight aggressive tax planning” among EU member states.
“Our citizens and our companies expect us to cope with tax avoidance and aggressive tax planning. It is our common duty to meet their expectation by ensuring that everyone pays their fair share of tax to the state where profits are generated,” said the letter, signed by Germany’s Wolfgang Schäuble, Italy’s Pier Carlo Padoan and France’s Michel Sapin.
Tax loopholes
The letter also called on the Commission to close tax loopholes, in a reference to the recent LuxLeaks tax controversy which saw EU Commission President Jean-Claude Juncker defend the tax policies of his home country of Luxembourg.
“Since certain tax practices of countries and taxpayers have become public recently, the limits of permissible tax competition between member states have shifted. This development is irreversible,” said the ministers.
Under Juncker, multinational corporations paid as little as 1 percent tax on their earnings in Luxembourg, a revelation that drew criticism in recent weeks and led to an unsuccessful censure motion against Juncker’s Commission on Thursday (27.11.2014).
‘Transparency is not enough’
In the letter, the ministers said that “transparency is not enough” and called for an anti-BEPS [base erosion and profit sharing] directive to “set a general principle of effective taxation” in the EU by the end of next year.
“This strong initiative taken by the EU, which could be proposed by the end of 2014, would give Europe the leading place it deserves at the international level.”
The letter was in response to a Commission plan, announced by Juncker on Friday 8.11.2014), to propose a new directive on the automatic exchange of information about tax rulings between EU countries.
According to the ministers, the Commission plan is not enough. The EU should adopt a set of rules similar to those used by the Organisation for Economic Co-operation and Development and the G20 countries.
- Author: Martin Kuebler, Euranet Plus News Agency
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