European Commission President Jean-Claude Juncker told parliamentary committees January 17 that the EU should adopt rules governing private rulings and advance pricing agreements.
Juncker, who spoke before a joint meeting of the committees for Tax Rulings and for Economic and Monetary Affairs, said that while tax rulings and advance pricing agreements serve the valuable purpose of providing certainty, they “have sometimes been abused in a rather uncontrolled way.”
“We want for there to be a framework for them in the future, to put an end to the phenomena we have have seen in the past,” Juncker told the EU lawmakers.
Juncker said that he made this suggestion to the G20 at the November meeting in Brisbane, but “the enthusiasm was not overwhelming.”
“It is important that we have European rules in this area; if we don’t manage to convince our partners in the G20 to do this, we should do it at least in Europe,” he said.
Margrethe Vestager, who is the EU competition commissioner, said that her office is looking into providing further guidance to member states and taxpayers on the application of EU state aid rules to private rulings.
The idea is to show member states what is best practice and how to avoid the problems illustrated by the open state aid cases, she said
Vestager reported that all EU states are now cooperating with her office’s investigations into private ruling practices. “This has allowed us to take the inquiries to a deeper level,” she said.
“We have asked each member state to provide us with 10 to 12 concrete tax rulings in order to have a more detailed analysis of how tax rulings are used in the member state,” Vestager said.
Juncker, who is Luxembourg’s former Prime Minister and Minister of Finance, assured the MEPs that he was not interfering with Vestager’s investigations into private rulings issued by Luxembourg. It would not be ethical, he said.
Vestager’s office is investigating Luxembourg private rulings issued to Fiat and Amazon for state aid violations. She also said she would investigate rulings made public in the “Lux Leaks” scandal, where over 500 Luxembourg advance rulings were published by a whistle-blower on the Internet, revealing Luxembourg’s complicity in multinational corporation tax avoidance.
Facing questioning by hostile MEPs about his role in the Lux Leaks private rulings, Juncker said he had no involvement with any advance tax rulings issued by Luxembourg to multinationals.
“I didn’t set up any system in Luxembourg in order to ensure that there was tax avoidance in order to discriminate against other European member states,” he said.
Juncker said that the private rulings were handled by Luxembourg tax authorities and that he never gave any instructions to them. Also, he said that although he met with companies, he never talked about their tax affairs with them.
Juncker said it is time to stop using the term “Lux Leaks.” Rather, he said, the term “EU Leaks’ is more appropriate because this a common practice in many member states.
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