EU Seeks to Shed Light on Sweetheart Tax Deals for Big CompaniesStephanie Bodoni and Gaspard Sebag
The European Union is stepping up its fight against tax avoidance and fiscal fraud with a plan to force the bloc’s 28 nations to share information on sweetheart deals for international companies.
A lack of transparency helps companies engage in “aggressive” tax planning and needs a harmonized EU approach, the European Commission says in the draft of a new law, obtained by Bloomberg News. The proposals, scheduled to be published Wednesday, would make the exchange of data on so-called tax rulings mandatory for all EU nations.
“Taxpayers often take advantage of the absence of common rules for the exchange of information to set up structures that shift profits to low-tax countries,” according to the proposals. These may not be the countries “where value is created.”
The EU is clamping down on corporate tax-dodging after the revelation last year of hundreds of leaked Luxembourg pacts showed some international companies effectively lowered their tax bills to less than 1 percent of profit. Regulators are also examining whether some arrangements are illegal state aid.
The LuxLeaks revelations forced new Commission President Jean-Claude Juncker to rebut claims he had presided over such deals during his almost 19 years as prime minister of the country.
The proposal would overhaul existing EU law to fight “tax ruling-driven structures which lead to a low level of taxation income” in one country by “eroding the tax bases of those other member states,” according to the draft.
The commission in Brussels didn’t immediately respond to a request for comment on the proposals.
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