Updated at 3.35pm
EUROPEAN COMMISSION PRESIDENT Jean-Claude Juncker wants countries’ tax rules to be brought into line with one another to cut out on “sweetheart” deals for multinationals.
Speaking publicly for the first time after the damaging “luxleaks” revelations, the former Luxembourg premier yesterday said there should be “fair rules among all” when it came to corporate taxes.
He said the commission would soon put out an order for details of any advance tax rulings to be automatically shared.
I have said that the commission would fight tax evasion and fiscal fraud … what we want to see are fairer rules between the different European member states,” he said.
Luxembourg’s use of advance tax rulings – which give companies the chance to lodge their plans and get a government’s go-ahead before filing their returns - has been thrust into the unflattering spotlight over the past week.
What about those Luxleaks, Jean-Claude?
Reams of documents relating to the tiny duchy’s tax affairs have been leaked with the material revealing major companies like IKEA, Pepsi and Irish food firm Glanbia all benefited from favourable tax agreements with the landlocked country.
While legal, the deals allowed firms to pay a tiny share of their profits in tax by exploiting the different ways Luxembourg and other nations like Ireland treated intra-company loans.
This meant the small country was effectively running as a tax haven for multinationals and using the trade to prop up its financial sector.
But Juncker denied doing anything wrong during his 18-year reign as Luxembourg prime minister during which the controversial deals were struck.
I have never given illegal tax instructions … don’t depict me as a friend of big capital,” he said.
A history lesson then
However, in a series of speeches as Luxembourg’s prime minister that were highlighted in the Wall Street Journal, Juncker credited himself with using the country’s low tax rates to lure big companies to the country.
“That AOL and Amazon come to Luxembourg, that with and through them we get a new perspective to the future, is the result of a correct tax policy, of a correct infrastructure policy, but also the result of tough negotiations with the top management of the groups,” he was quoted as saying.
“They took place in America, they took place here at home, and I did not lead them alone.”
And back to Ireland
Ireland is still facing a commission probe into an alleged sweetheart tax deal it cut with Apple that allowed the tech giant to escape potentially €160 million in payments to the exchequer over nearly 20 years.
Finance Minister Michael Noonan recently said he expected the Apple investigation to be dropped and that, if it went ahead, Ireland would win any case against it easily.
Meanwhile, the government announced in the Budget it was phasing out the controversial “double Irish” tax loophole in favour of a “knowledge development box” incentive.
Fine Gael MEP Brian Hayes said Ireland had “first-mover advantage” in taking an early stance on its tax laws, but some of the criticism being levelled at the Republic was hypocritical.
“A lot of this debate is very much dependent on the size of your country – it’s OK according to Britain or Germany to attack Ireland because they’re big countries,” he said.
But the truth of the matter is they have their own little schemes where regularly people don’t shine the light on them.”
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