17 September 2015

Juncker to MEPs on current corporate tax rules: "We should create some order!"

"The current system of corporate tax rules is unfit for purpose and unjust. Some companies are losing out, whereas others win by hiding behind a variety of national rules", Commission President Juncker said at a joint meeting of the committees for Tax Rulings and for Economic and Monetary Affairs.

"We need a better insight into how multinational companies behave and how they make use of the differences between countries. Then we should create some order!", he added.

Mr Juncker said that fighting fraud and tax avoidance and evasion are among his Commission’s top ten priorities. "We need to move towards tax harmonization. The internal market is incomplete in the area of corporate taxation", he told MEPs in his opening remarks. He also pointed to the difficulties of aligning all EU member states - which have a veto on tax issues - but cited the example of the harmonized systems used to collect Value Added Tax (VAT) and excise duties to show that a common approach is not impossible.

Council committee on taxation?

Mr Juncker suggested that the Council should establish a committee on taxation, like that on financial and economic issues. Such a committee should build on the work of the current Code of Conduct Group in the Council and report to ministers. "We should also convince our partners in the G20 group to better adjust our systems. But we should also be prepared to go ahead without them", he added.

Asked about his past role as Luxembourg’s finance minister, Mr Juncker said that he had never stated a position on individual rules set by the Luxembourg tax authorities. "Of course I met with companies like Commerzbank, but I never talked about tax issues with them", he said. Mr Juncker was clearly not pleased by MEPs’ continuous references to "’Luxleaks’: Tax rulings are common practice in many member states. It should instead be ‘EUleaks’", he said.

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What’s cooking?

Commissioner Pierre Moscovici explained that he - like Mr Juncker - favours a common consolidated corporate tax base, but that this requires a step-by-step approach: "We should start with a common base and in a second phase we might try for consolidation, so as to combine the possible with the desirable", he told MEPs.

On the possibility of introducing mandatory country-by-country reporting for multinational companies, Mr Moscovici said he wanted to see the results of a public consultation and an impact study first. He was more reticent about the possibility of sharing more tax-related information with Parliament: "There are limits to what we can transfer", he said.

Full press release

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