EU to require share of tax ruling data in tax avoidance fight

(Reuters) – The European Commission will lay out plans on Wednesday designed to limit tax avoidance in the wake of recent revelations that major corporations were paying minimal state contributions across the European Union.

EU members will be required to share information on cross-border tax rulings, according to a draft documents of the Tax Transparency Package (TTP) seen by Reuters on Tuesday.

These rulings provide guarantees on how a company will be taxed, but can be exploited by companies that artificially shift profits to the country where they are taxed the least.

The proposals come after international criticism of the tax practices of Luxembourg intensified late last year after media revelations based on leaked documents, dubbed “LuxLeaks”, showing corporations secured beneficial rulings to minimise their tax due on operations in Europe.

The European Commission launched investigations last year into whether U.S. retailer Amazon (AMZN.O) and a unit of Italian carmaker Fiat (FCHA.MI) benefited from unfair state aid to the detriment of competitors as a result of Luxembourg’s tax arrangements.

It is simultaneously looking into the treatment of Starbucks (SBUX.O) by the Netherlands and Apple (AAPL.O) by Ireland.

“Aggressive tax planning, harmful tax regimes and tax fraud all rely on an environment of complexity and non-cooperation to thrive,” the Commission says in its latest tax proposal

“Combating tax evasion and avoidance therefore requires more openness between tax authorities and greater cooperation between governments,” it continues.

The EU already has rules requiring the automatic sharing of financial information, designed to bring to an end decades of bank secrecy.

As part of TTP, the Commission will also consider whether to secure public access to a limited set of tax information of multinational companies, transparency already required for banks and large extractive and logging businesses.

The Commission views the TTP as the first step in its plans to fight tax evasion and avoidance.

It is also plans measures later this year to ensure fair and efficient corporate taxation and relaunch a proposal for a common consolidated corporate tax base.

(Reporting by Philip Blenkinsop and Barbara Lewis; Editing by Tom Heneghan)