MEPs say agreement on automatic exchange of tax rulings falls short

Members of the European Parliament Economic and Monetary Affairs Committee have expressed disappointment with a deal struck October 6 for a EU directive on automatic exchange of tax ruling information.

“If this is the final text, member states will have missed a great opportunity to create more transparency in taxation,” said Parliament rapporteur Markus Ferber in an October 13 statement.

The committee members said the agreed-to exchange is too limited because it applies only to cross-border tax rulings and advance pricing agreements, as opposed to all rulings that have international effects. Moreover, according to the agreement, rulings issued 10 years before the directive enters into force would not need to be exchanged, even if a ruling is still valid at the time the exchange begins.

The MEPs also said that the EU Commission should have been empowered to examine rulings to investigate tax avoidance and state aid violations. “Why are member states clearly denying the Commission access to these data? Are they hiding something?” Ferber asked.

The committee members said that the exchange should begin in 2016 rather than 2017. Also, the information should be exchanged more quickly after a ruling is issued than is called for in the deal, they said.

The EU currently requires spontaneous exchange of information on private tax rulings; however, the system does not work adequately because states use loopholes in the law to avoid providing information.

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