Tax avoidance creeps onto EU summit agenda

BRUSSELS: Minimal tax paid by conglomerates are back in focus after US Senate criticism of Apple for stashing tens of billions of dollars in a network of subsidiaries across the globe.
The issue is now creeping up the European political agenda with EU leaders staging a summit on Wednesday largely focused on trying to convince Luxembourg and Austria to share bank records openly with European Union partners.
Luxembourg on Tuesday said it would begin sharing account information on a more automatic basis with the United States from 2015, following negotiations with Washington.
“The US is a big stick in this area,” a senior EU diplomat said, highlighting a “30 percent hit” for foreign financial institutions that do not fall into line with a 2010 US law, the Foreign Account Tax Compliance Act (FATCA).
However, with Luxembourg and Vienna still demanding parity of treatment with neighboring tax havens notably Switzerland but also British offshore territories, not everyone in Brussels is convinced the Europeans will move as swiftly as the US.
“Tax harmonization is not the name of the game,” said a top EU official closely involved in preparing the one-day summit otherwise concerned with energy policy.
While Britain has put the corporate tax aspect of international avoidance on the agenda for upcoming Group of Eight talks, Ireland’s fierce resistance to moves on its corporate-friendly national tax policy — fully protected under EU treaties — means the political will ahead of the summit is “not as advanced.”
The European Commission, however, expressed a determination on Tuesday to rein-in the ability for companies such as Apple or Google to be so creative with their tax jurisdictions,
These “abuses” need clamped down on “urgently,” said Commission spokesman Michael Jennings.
The US Senate committee said special arrangements negotiated between Dublin and Apple meant a corporation tax take of less than two percent, but Irish Deputy Prime Minister Eamon Gilmore argues the loopholes enabling such rates are widespread in other jurisdictions.
Irish Finance Minister Michael Noonan insisted recently that Dublin operates a fully transparent tax system, arguing that a standard-rate corporation tax of 12.5 percent should not be compared like-for-like with other countries given differences in labor and other types of taxation.