EU to turn up heat on tax evaders

The European Commission on Wednesday unveiled an action plan aimed at closing loopholes and harmonizing tax rules to prevent big multinationals from shirking their tax-paying duties in the 28-nation bloc.

The reform proposals include making companies pay taxes where they conduct business, ending sweetheart tax deals, and creating common EU rules for calculating corporate taxation.

"We want corporate taxation to be fair and growth-friendly. Every company, big or small, must pay its share of tax at the place where it makes its profits," said EU Vice-President Valdis Dombrovskis.

Dead on arrival?

A Commission favorite, but also one of the most contested initiatives, is the so-called common consolidated corporate tax base (CCCTB), which would hamornize tax rates across member states. A similar proposal was floated four years ago, but was met with fierce opposition by some governments, which viewed the step as an infringement on their sovereignty.

The proposed crackdown on sweetheart tax deals is more likely to be welcomed, after last year's "LuxLeaks" scandal exposed that the tiny duchy of Luxembourg had offered some of the world's largest companies billions in tax breaks in return for their business. The list included Apple, Amazon, IKEA and Pepsi.

Brussels is now also investigating similar dealings of Apple in Ireland and Starbucks in the Netherlands.

"Our current approach to corporate taxation no longer fits today's reality. We are using outdated tools and unilateral measures to respond to the challenges of a digitalized, globalized economy...Big, small and medium-sized companies should be able to benefit from the internal market on an equal footing," said EU Economic Affairs Commissioner Pierre Moscovici.

Any changes to EU tax rules would require unanimous approval by all 28 nations.

Tax haven blacklist

In addition to the reform proposals, the Commission also published a list of 30 nations deemed particularly "non-cooperative," when it comes to clamping down on tax evaders. The blacklist included the Cayman Islands, Hong Kong, Liberia and Monaco.

Moscovici hailed the list as a "decisive step" that would "push non-cooperative non-EU jurisdictions to be more cooperative and adopt international standards."

pad/hg (AFP, dpa, Reuters)