Brussels, 10/09/2003 (Agence Europe) - The European Commission has presented a proposal that aims to speed up the flow of information between the tax authorities of Member States by permitting them to co-ordinate their investigative action against cross-border tax fraud and allowing them to carry out more procedures on behalf of each other. The proposal which relates to direct taxation (income tax, company tax and capital gains tax) would update and rectify weaknesses in the existing Directive on Mutual Assistance, 77/799/EEC.
The Commission's initiative follows a June 2000 Council report on tax fraud that said existing EU directives and regulations were inadequate for the combat of fraud, which in the direct tax area involves, in particular, problems of under-invoicing and over-invoicing (transfer pricing). The proposal unveiled on Tuesday contains four elements: (1) it introduces the possibility for Member States to conduct simultaneous control checks of the locally based activities of taxpayers operating in several countries of the EU and to share the information obtained with each others; (2) it would ensure that, when a State has to initiate enquiries in order to obtain information needed by another country's tax agency, it would treat the enquiry as it were acting on its own behalf (because the procedures are generally less complicated in domestic cases and the information should thus be provided more quickly); (3) it would ensure that a Member State that has been requested to supply information would, if requested, carry out certain administrative procedures on behalf of another Member State such as serving the taxpayer with an amended assessment; and (4) the proposal would clarify certain ambiguities in the 1977 Directive in order to eliminate some current differences of interpretation of the Directive by Member States. The proposal supplements recent EU direct tax measures (and measures currently being prepared) namely the directive on taxing interest on savings and the February 2003 political agreement at Council level on tightening cooperation between Member States in to tackle VAT fraud. The full text of the proposal is available on the Europa internet site: http: //europa.eu.int/comm/taxation_customs/whatsnew.htm