Juncker addresses EU parliament on corporate tax avoidance

Jean-Claude Juncker outlines to Parliament's ECON and TAXE committees his plans to tackle tax avoidance.

By William Louch

17 Sep 2015

European Commission President Jean-Claude Juncker and European taxation Commissioner Pierre Moscovici met with the Parliament's economic affairs committee (ECON) and the special committee for tax rulings (TAXE) to discuss the Commission's proposals for more transparent and efficient taxation of multinational companies across Europe.

The meeting came as member states' tax practices have come under increased scrutiny following the 'LuxLeaks' scandal. This revealed that Luxembourg had approved schemes to help multinational companies, including Fiat, Amazon and Ikea, to avoid paying tax.

The co-existence of 28 different tax systems in a single integrated market has led to fierce tax competition between member states. Consequently, member states have continually lowered their corporate tax rates, to attract and retain foreign investment.


Juncker made it clear how important tackling corporate tax avoidance is to the Commission, saying, "the fight against tax avoidance and evasion is one of the Commission's top 10 priorities." He went on to say that he felt he had, "a duty to fight tax evasion and avoidance."

He was strongly critical of the current system, labelling it "unusable and unjust" with "multinational companies extremely adept at making use of differing tax rules in EU countries."

He went on to discuss how the current system is outdated and unable to cope with globalisation and digitised economies. Recent changes to business structures meant that "in this globalised world and digitised economy […] EU member states must develop greater cooperation than we have at this time."

He did, however, make clear the need to balance a crackdown on corporate tax avoidance with encouraging investment in the EU. He said, "there is a need to generate greater growth and investment given the current lack of investment, however, company taxation should not act as a break on investment."

Specifically, he identified two key measures to help end unfair tax competition without harming business. He highlighted the need to tax profits where they are made.  He also drew attention to the harm a fragmented tax policy can cause to EU competitiveness, with the 28 different tax bases causing heavy compliance costs for multinationals.

He went on to reiterate this point stating, "tax harmonisation doesn't mean the end of tax competition. We want to end unfair tax competition."

This would include levelling the playing field between multinational companies and SMEs.  Moscovici said that the EU estimates that, "on average SMEs make a tax contribution 30 per cent higher than multinationals."

Juncker saw rectifying this issue as a priority, saying the Commission must, "work to get more tax equality to protect SMEs, who are obliged to fulfil all their tax obligations, unlike multinational companies."

European competition Commissioner Margrethe Vestager, also addressed these concerns, telling the TAXE committee, "we want the competition to be fair, especially between SMEs and International companies."

Juncker's proposals drew immediate criticism from MEPs. Sven Giegold, a Greens/European Free Alliance group MEP and member of parliament's TAXE committee, tweeted, "Embarrassing and revealing! Juncker said nothing of substance and expressed no regret for transforming Luxembourg into a tax haven."

Parliament is expected to vote on the TAXE committee's final report during the November plenary in Strasbourg.

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