Brussels, 07/11/2014 (Agence Europe) - EU Taxation Commissioner Pierre Moscovici promised on Friday 7 November that the debate about the abusive tax practices of big companies would not stop at competition policy. He said after an Ecofin meeting that there was no time to waste when it comes to reducing the margins for tax abuse and aggressive corporate fiscal policy.
The day after a raft of leaks to the press of 548 tax agreements signed by Luxembourg with 340 multinationals from 2002 to 2010 to give the companies significant tax deductions, Ecofin had to admit temporary defeat on the anti-abuse clause of the EU parent/subsidiary directive. The clause should allow companies to ignore multinationals' artificial tax-avoidance arrangements and levy tax on the genuine profits instead. The Netherlands and the United Kingdom said they needed more time to consult parliament and Belgium wants to take a deeper look at the matter. Ecofin is expected to reach agreement on the matter in December.
“Especially in the current context, that we all know, there is no time to waste in reducing any opportunities for abusive practices and aggressive tax planning. Also I observed a new spirit, in order to fight these practices of tax fraud, tax evasion, tax base erosion and to go on fighting bank secrecy,” said Pierre Moscovici, pointing out that he had received a clear mandate from the president of the European Commission (a Luxembourger) to make progress in the fight against tax avoidance. Later that day, Margaritis Schinas, a European Commission spokesperson, said that the Commission had much more dynamic powers when it came to competition, where its powers were virtually exclusive. DG Competition is dealing with a number of tax ruling cases and examining whether they gave unfair advantages to multinationals registered in Luxembourg and elsewhere. Schinas said that when it comes to taxation, the Commission can issue proposals, but the obstacle that nobody has been mentioning since yesterday is that decisions require unanimous voting and therefore talks will be more political. Schinas said these were questions that should be asked of the member states.
At the Bozar in Brussels the previous day, Competition Commissioner Margrethe Vestager said: “First of all, I admire all the work put in to organise the leaks and to present the cases in the papers so that it's part of our debate about what is fair when it comes to how businesses organise themselves. (…) There is a complete change of mood when it comes to taxation, so maybe not just a debate about competition, but also about what kind of corporate taxation do we think we should have. There is a proposal, it concerns the common corporate tax base. So ordinary companies would not have to employ advisers and lawyers in order to pay their tax in a fair and decent way, they would know in every country they're in that they have the same tax base, would be good sort of moving forward also in the common tax area, to take this proposal to make compromises to bend towards each other and move this agenda forward.” Moscovici pointed out that the common corporate tax basis is blocked at Council level, but he hoped rapid agreement on enhanced cooperation on the FTT would put pressure on the member states to more towards fiscal harmonisation or another path. Fiscal harmonisation at present, he added.
DG Competition's investigation. Luxembourg has only provided a portion of the information demanded by the European Commission. Quizzed about the option of using documents leaked this week on the 548 tax deals between Luxembourg and more than 340 multinationals, Commission spokesman Ricardo Cardoso said that the Commission could use the information as market information, but if it wants to use it in a particular case, it has to make an official request to the government, which would then have the ability to make comments on the document. (EL and CG)