EU finance ministers were due Wednesday to take a first stab at reaching agreement on proposals aimed at clamping down on corporate tax avoidance. However, expectations of a breakthrough were low, with many differences remaining among member states.
The measures, proposed by the European Commission in January, are part of a wider clampdown on multinationals that use loopholes to cut their tax bills.
Corporate tax-dodging deprives EU member states of up to 70 billion euros (78 billion dollars) in revenues annually, according to a study by the European Parliament - more than five times the bloc's funding of Europe's refugee crisis in 2015-16.
The proposed steps include: outlawing some of the most commonly used tax avoidance schemes; sharing tax-related information on multinationals among member states; and compiling a blacklist of non-EU countries that refuse to cooperate in the tax clampdown.
"EU member states were themselves very quick to join the chorus of anger condemning the scourge of tax avoidance and they now need to show that they have the courage of their convictions," commission spokeswoman Vanessa Mock said Tuesday.
But Dutch Finance Minister Jeroen Dijsselbloem predicted that the talks would be "difficult," as EU member states "still have many issues." Since taxation is a matter decided on the national level, he noted that "we need to bring everyone on board ... or otherwise there is no deal."
"On the other hand, our citizens are really asking for this," added Dijsselbloem, who is also the head of the Eurogroup panel of eurozone finance ministers.
His Austrian counterpart, Hans Joerg Schelling, said he expected little progress at Wednesday's talks, noting that member states - Austria included - were each fighting to preserve their existing rules.
"What I cannot agree to is the fact that, when proposals are made, they are then watered down for so long until the actual effect of combating fraud no longer occurs," Schelling added.
The commission has already 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.
While tax avoidance through legal loopholes is not punishable per se, the EU's executive believes that so-called tax rulings could offer companies unfair advantages, in breach of the bloc's competition rules.
The issue made headlines on Tuesday, when Belgian media reported that Luxembourg had started verbally offering companies beneficial tax arrangements, raising concerns that the country may be trying to sidestep new EU tax transparency measures.
Luxembourg said on Tuesday that the reports were incorrect.
Dijsselbloem said ahead of Wednesday's talks that such a practice would not be acceptable, as it "blows up the rules."
Any tax ruling "needs to be formally put down in documents so it can be exchanged between countries, and I’m sure that my Luxembourg colleague agrees with me," Dijsselbloem added.
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