Progress reported on EU plans for crackdown on tax fraud

Thursday 23 May 2013 00.01
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EU leaders met in Brussels to discuss tax fraud and tax evasion measures
EU leaders met in Brussels to discuss tax fraud and tax evasion measures
Global corporations such as Google have come under fire for their alleged 'tax planning'
Global corporations such as Google have come under fire for their alleged 'tax planning'

European Union leaders are reported to have made progress on several initiatives to crack down on tax fraud and tax evasion.

Finance ministers are due to agree before the end of June on a series of rapid-response measures to eliminate multi-billion euro VAT fraud scams.

Negotiations will begin with Switzerland, Lichtenstein, Monaco, Andorra and San Marino on adopting EU standards on sharing information on savings.

Progress is also reported on agreeing a policy on dealing with aggressive tax planning by multinational companies - a matter EU leaders will return to at the end of the year.

European Commission President Jose Manuel Barroso said there was a "new momentum" on the issue.

Talks chairman Herman Van Rompuy said there was significant movement after years of blockage.

Taoiseach Enda Kenny said the row over Apple's tax position with Ireland "wasn't mentioned to me at all" during the meeting.

Mr Kenny said: "It wasn't an issue that was raised or discussed at all."

He described the meeting as having taken place "without antagonisms or tension."

He also said that he disagreed with testimony given by Apple executives to a US Senate Committee.

Mr Kenny said: "I disagree with the comment made in the US Senate yesterday. Ireland's Corporate Tax rate is 12.5%. It has been that way for a period.

"The World Bank sets its effective rate at 11.8% and that applies across the spectrum. There are no differences in any areas or sector for Ireland. We do not do special deals in regard to that Corporate Tax Rate."

Asked if he believed the Apple executives were lying, the Taoiseach repeated that he "disagreed" with their testimony.

Swedish Prime Minister Fredrik Reinfeldt said earlier that multinationals needed to "pay their taxes" given the investment demands they make on countries.

French President Francois Hollande said he would "fight against tax evasion by individuals and companies".

A number of EU countries have voiced annoyance for years over Ireland's low corporate tax rate

British Prime Minister David Cameron has urged the rest of the EU to back global action against what he has described as "staggering" losses to national exchequers.

In a letter to fellow EU leaders, Mr Cameron has urged European governments to join forces to act against "staggering" losses from tax evasion and "aggressive avoidance" by adopting a US system of cross-border tax information exchange.

That proposal is something the UK, Germany, France, Spain and Italy are jointly testing and intend to implement by the end of this year.

The issue of tax evasion has come under sharper focus because of the economic crisis, with member states struggling to balance budgets and raise revenue.

In December, the European Commission proposed an action plan on what is called aggressive tax planning.

The plan aims to enshrine greater transparency and avoidance of loopholes in national, EU and bilateral tax law.

The European Commission does not believe that tax havens exist within the EU.

However, it believes that taxation should take place where the real economic activity of a corporation takes place.

It also argues that EU member states should avoid what it calls artificial structures that allow major corporations to dramatically avoid paying tax.

The Commission also wants a stronger definition of what constitutes a tax haven outside the EU.

One concern is that taxable income is being routed through member states, such as Ireland and the Netherlands, to off-shore locations, such as Bermuda and the Cayman Islands, which have traditionally been considered tax havens.

Keywords: tax, eu summit