EU ministers take new stab at rules to close corporate tax loopholes

EU finance ministers took a new stab Friday at agreeing to measures aimed at clamping down on corporate tax cheats, after failing to strike a deal last month, while recent tax avoidance scandals have put pressure on them to act.

The measures, proposed by the European Commission in January, are part of a wider battle against multinationals that use loopholes to cut their tax bills. They would outlaw some of the most commonly used tax avoidance schemes.

Corporate tax-dodging is thought to deprive EU member states of up to 70 billion euros (78 billion dollars) in revenues annually - more than five times the bloc's funding of Europe's refugee crisis in 2015-16.

"We absolutely have to show that we are capable of countering these practices," said EU Economy Commissioner Pierre Moscovici. "We cannot shirk the desire of citizens to see companies conform to a fiscal ethics that normal people abide by."

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

But Friday's discussions would be difficult, said Dutch Finance Minister Jeroen Dijsselbloem, whose country holds the European Union's rotating presidency. Decisions on tax-related issues require unanimity in the 28-member bloc.

"I’m still negotiating behind the scenes with a number of countries to get an agreement. So I can’t make any promises there," he said ahead of the ministers' meeting in Luxembourg.

The Czech Republic for one is threatening to block the deal unless it is granted an examption from EU rules on value-added tax (VAT), according to diplomatic sources. Such an exemption would, from the Czech point of view, help counter fraud.

The issue of VAT fraud is on Friday's agenda, with Austria also seeking an approach similar to the Czech one. But Moscovici warned against linking the two topics.

"I am ready as a commissioner to consider both [the Czech and Austrian] cases but we should really work in good faith, and good faith is not connecting together themes that are quite different," he said.

The ministers are also expected to approve a roadmap outlining ways of further shoring up Europe's banking industry in the coming years, to avoid taxpayers having to foot the bill of any future bank bailouts.

German Finance Minister Wolfgang Schaeuble said it was important to press ahead with so-called banking union, at a time when the sector is marked by "a great nervousness, also against the backdrop of uncertainty over the outcome of the British referendum."

British voters will decide on Thursday whether the country is to remain a member of the European Union, with many expecting a negative vote to cause financial market turbulence.

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