EU countries should be compelled to inform other member states in advance of plans to introduce tax initiatives that could affect their own or another country’s effective tax rate, according to a report to be considered by the European Parliament’s economics committee today.
The report, initiated in the wake of the Lux Leaks scandal, also calls on the European Commission to amend the system whereby money recovered during a state aid investigation is returned to the member state which granted the illegal tax-related aid.
This could have implications for Ireland if the European Commission rules against Apple in its ongoing investigation into the company's tax relationship with the State.
Members of the European Parliament’s powerful economic and monetary affairs committee (Econ) are due to vote in Brussels today on the report which outlines a number of proposals designed to clamp down on aggressive tax-planning at EU level.
The report is a legislative own-initiative report, which means the European Commission must respond to it.
Among the recommendations included in the latest draft is the proposal that the commission apply countermeasures on firms who use tax havens to put in place aggressive tax-planning schemes.
In relation to the system whereby money recovered during a state aid investigation is returned to the member state which granted the illegal aid, the Econ committee suggests monies recovered should instead be allocated to the EU budget “or to member states which have suffered from an erosion of their tax base”.
Common tax base
The introduction of a Common Consolidated Corporate Tax Base (CCCTB) also features strongly in the report, with the parliament calling “as a first step” for a mandatory common corporate tax base by June 2016, followed by a full CCCTB, including the consolidation element, by the end of 2017.
European economics commissioner Pierre Moscovici announced this "two-step" approach to the CCCTB in June in an attempt to revive the stalled legislation. Ireland is strongly opposed to the idea of a CCCTB, which was proposed by the previous European Commission, but failed to garner sufficient political support from member states.
Speaking in Strasbourg last week, Mr Moscovici said a CCCTB for the EU was both “necessary and realistic”, and would be an important instrument in the fight against tax evasion.
Finance ministers
Next Tuesday’s meeting of EU finance ministers in Brussels is expected to include the ministers’ first discussion on CCCTB since the announcement of the OECD’s Base Erosion and Profit Shifting (Beps) guidelines in October.
Also included in the European Parliament report is a proposal that the Code of Conduct Group on Business Taxation, a meeting of tax experts from member states including Ireland, which meets regularly in Brussels, is transformed into a fully-fledged council working group. The report proposes the group would "identify harmful tax practices in the Union" and propose "measures and timelines for the elimination of harmful tax practices" .
The group would also review the “spillover effects” on other EU members of new tax measures introduced by individual countries.
Should the report be adopted at committee stage in Brussels next Tuesday, the proposal is likely to be put to a full vote at the European Parliament’s plenary session in Strasbourg next month.
Tax has moved to the top of the EU's economic agenda in the wake of the Luxembourg Leaks scandal which revealed that thousands of companies slashed their tax bills through individual tax rulings offered by Luxembourg.
