Under the plans, due to be formally unveiled on 21 March, the executive will set out proposals for taxing the revenues of global digital firms.
Speaking at a news conference in Parliament on Wednesday, the French official said the “ambitious” and “targeted” measures will be designed to cope with digital companies that can shift profits between jurisdictions.
Moscovici told reporters that the proposals on how to tax digital companies will mean taxing “for the short-term some parts of digital activities with a modest rate and a very precise basis.”
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The proposal, he said in Strasbourg, will call for a European common corporate tax base which represents a “huge reform, the major reform for the 21st century for corporate taxation”.
There will, he said, also be a better definition of “what is digital presence and how we can measure the presence of digital companies so that they can be taxed.”
Moscovici said the current system of taxing multinationals was “not fit for purpose” and the proposed model, called ‘equalisation tax’, seeks to tackle this and also the public’s discontent with corporate taxation.
The official, who was speaking ahead of a debate in Parliament on the issue on Wednesday, said the EU measures represent “a major reform” of corporate taxation.
Moscovici said, “Clearly, we all agree that taxation should play a key role in Europe’s competitiveness but, currently, the corporate taxation system is not fit for purpose.
“Member states face shrinking tax bases but they are having to struggle with old fashioned and antiquated tools to tackle tax evasion and tax avoidance.
“What we are proposing is a fundamental reform of the way digital companies are taxed in the single market. This reform of the corporate taxation will modernise the system.
“It will make life cheaper and easier for businesses and also make the EU more attractive for investors.”
Describing Parliament’s commitment to the issue of tax fraud and tax evasion as “truly impressive”, he outlined details of the package on digital taxation he will present next week.
He said, “Digital companies are growing far faster than other companies in Europe, at a rate of 14 per cent. This is quite impressive but digital companies pay only half the rate of other types of companies. Digital companies notch up huge profits but this cannot be taxed in Europe because they have no physical presence here that we can identify.”
He went on, “The Commission is not anti-digitilisation. On the contrary, we are in favour of further progress in the digital economy but there are risks involved here and we need to take steps to counter these risks.
“The truth is that our tax systems are not up to scratch and not in a position to cope.”
He said the “three-pronged approach” to be outlined on Wednesday will focus “structural reform”, adding, “We must ensure there is a level playing field in taxation so that is why we will propose imposing tax on companies’ turnover.
“We will also propose a more targeted response, one which is more ambitious and consensus-based. This will be a simpler and fairer tax system and one which is better equipped to stop large scale tax avoidance.”
He denied that the proposal on digital taxation came in response to protectionist moves, adding, “Let us not connect the two. What we propose is a response to a structural challenge. These are targeted measures to tackle a particular problem.”
He admitted, “Adopting a tax text in the EU is never easy because it needs unanimity but the cause we are championing, I believe, unites people and brings people together.
“On tax there is a sense of injustice and the feeling that individuals are paying over the odds for the economic crisis compared with multi nationals which can use tax loopholes to avoid paying tax. That is why I believe this issue is of general interest.”
He added, “Tackling this sense of injustice and creating a fairer system is the guiding principle behind these proposals.”
Two MEPs, Alain Lamassoure and Paul Tang, who were sat alongside Moscovici at the news conference, welcomed the crackdown.
Dutch Socialist Tang said, “People say the Netherlands is a small country but it is the biggest in the world for tax avoidance.”
Lamassoure, a French EPP group member said, “It is important to shine a light on these issues and I am glad to say that the EU is the first to dare to deal with digital taxation.”
Their comments come after the Council reached agreement earlier this week on a proposal aimed at boosting transparency in order to tackle aggressive cross-border tax planning.
The draft directive is the latest of a number of measures designed to prevent corporate tax avoidance.
Separately, the European Parliament is due to decide on Wednesday on the nominal composition of its new special committee on financial crimes, tax evasion and tax avoidance.