EU crackdown on corporate tax cheats criticized as too weak

EU member states agreed Tuesday on measures aimed at cracking down on corporate tax cheats, but were accused of not taking firm enough action following a recent spate of tax avoidance scandals.

The measures, based on proposals made by the European Commission in January, are part of a wider battle against multinationals that use loopholes to cut their tax bills.

"Today's agreement strikes a serious blow against those engaged in corporate tax avoidance," EU Economy Commissioner Pierre Moscovici said. "For too long, some companies have been able to take advantage of the mismatches between different member states' tax systems."

Corporate tax-dodging is thought to deprive EU member states of up to 70 billion euros (79 billion dollars) in revenues annually - more than five times the bloc's funding of Europe's refugee crisis in 2015-16.

But the anti-poverty group Oxfam accused finance ministers of having "destroyed" the European Commission's initial proposals, with Aurore Chardonnet calling it "outrageous that governments have been unable to agree on an effective approach against parking profits in tax havens."

Green EU lawmaker Sven Giegold said the compromise deal was a "scandal," arguing that member states "are not serious about the fight on tax dumping," in reference to the practice of countries attracting multinationals with low taxation.

"More needs to be done to ensure that all the loopholes in our tax system are closed" after finance ministers had watered down the original proposals, added Socialist EU lawmaker Hugues Bayet.

The ministers struck a compromise deal on Friday, but Belgium and the Czech Republic said they had to consult domestically before giving their full approval. They were given until midnight on Monday (2200 GMT Monday) to raise any objections.

The deal, which is due to take effect from 2019, aims to ensure that companies pay taxes where they earn their profits. Its provisions include so-called "exit taxation" on assets moved out of a member state, as well as a general rule against abusive tax arrangements.

The approach builds on guidelines laid out by the Organisation for Economic Co-operation and Development and endorsed by the G20.

The issue of tax avoidance made headlines in April with the Panama Papers, a massive data leak by Panama-based law firm Mossack Fonseca that put politicians, athletes and celebrities in the spotlight by detailing how money was being funneled to shell companies in tax havens.

The commission has also launched investigations into preferential tax deals offered to multinationals in Belgium, Ireland, Luxembourg and the Netherlands, with the implicated companies including Apple, Starbucks, McDonald's and Fiat.

Last update: Fri, 24/06/2016 - 08:49

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