EU pledges to intensify fight against tax avoidance

The European Commission has pledged to intensify its fight against tax avoidance and increase tax harmonisation at an EU level, as it responded this morning to the latest wave of revelations regarding tax rulings in Luxembourg.

But it denied that the European Commission president Jean-Claude Juncker had questions to answer, saying he was “100 per cent committed” to his job and to the political priorities outlined at the start of his tenure, including the fight against tax avoidance. “Mr Juncker will continue with his duties,” a European Commission spokesman said in Brussels.

Mr Juncker and his team of EU commissioners are currently in Luxembourg - the country at the heart of the corporate tax scandal - to take their formal oath of independence at the European Court of Justice.

In an interview with French daily Libération , Jean-Claude Juncker said he had been "weakened" by the Lux leaks scandal.

Meanwhile, the Luxembourg finance ministry has responded to the latest revelations by the International Consortium of Investigative Journalists (ICIJ) which show that a number of firms including Walt Disney and Skype slashed their tax bills through tax structures facilitated by the Duchy.

Pointing out that the documents “do not fundamentally differ from those already published a few weeks ago,” the Luxembourg finance ministry said it “agrees that the legitimacy of certain mechanisms, which are compliant with international and national law, can be put in doubt from an ethical point of view.”

It conceded that the interaction of the tax regimes of multiple countries, together with the application of non-double taxation treaties “can lead to a significant reduction of a company’s tax burden, or even no taxation at all.”

However, it notes that the “analysis of this situation calls for a broad perspective, and cannot be limited to one country’s regulatory framework.”

The statement adds that the way in which the Lux leaks documents were acquired “is highly questionable.”

A number of MEP's have reiterated their call for a committee of investigation to be established by the European Parliament, following the latest Luxembourg tax revelations.

The finance spokesman for the Green group in the European Parliament said this morning that Mr Juncker was “politically-compromised.”, “These latest leaks on corporate tax avoidance in Luxembourg show that we are far from knowing the extent of the practices engaged in by multinational firms to avoid their tax responsibility. This is true for Luxembourg but also other EU countries.”

Jean-Claude Juncker survived a vote of no confidence two weeks ago in the European Parliament in Strasbourg, having won the support of the two biggest groups in the parliament – the centre-right European People’s Party (EPP) of which he is a member and the centre-left Socialists and Democrats (S&D) .

The European Commission has proposed a range of new measures to deal with corporate tax avoidance, including a planned directive on the automatic exchange of tax rulings to be unveiled early next year and a proposal to progress the Common Consolidated Corporate Tax Base (CCCTB).

Asked if the Commission had the power to effect much change given that most tax decisions at EU level require unanimity from all member states, a European Commission spokeswoman said the “mood had changed” regarding tax among member states.