EC to force member states to share tax rulings to curb avoidance

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The European Commission has issued a string of tax transparency measures aimed to combat corporate tax avoidance and unfair tax competition in the EU, including suggestions for legislation to make member states share their tax rulings between fellow states every three months and more employ stricter tax reporting for multinational companies.
A key element of this tax transparency scheme is a proposal to introduce the automatic exchange of information between member states on their tax rulings. The Commission stated “companies wanting to minimise their taxes rely on the complexity of tax rules and the lack of cooperation between member states.”

Commissioner for economic and financial affairs, Pierre Moscovici, stated “we must adopt a zero tolerance policy for companies that avoid paying tax, and for the systems in place that enable them to do this. We have to rebuild the link between where companies are making profit and for this to happen, member states need to work together”.

By boosting transparency and cooperation, abusive tax practices will be much harder to come by. The new measures are designed to give member states the information they need to protect their tax bases and effectively target companies trying to escape paying tax.

Vice-President of the Commission Valdis Dombrovskis is responsible for all social dialogue. He commented “with the new proposal, tax authorities would be able to better identify loopholes or duplication of tax between member states”. Currently member states share very little information with one another about their tax rulings.

The Commission proposes to set a firm timeline: every three months, all national tax authorities will have to send a short report to every other member state. The new rules are likely to be implemented from the start of next year.