New rules that would ban countries offering sweetheart tax deals to multinationals would not work against Ireland’s interests according to the man in charge of drawing up the proposals, Pierre Moscovici.
The Economics Commissioner praised the way Ireland has been working on tax measures agreed by the OECD and said the way Ireland was implementing them was “quite remarkable”.
Countries will still be able to set their own corporation tax rate and their own corporate tax rules. “We are not calling into question tax sovereignty”, he said.
The proposals, that need the unanimous agreement all EU member states before they would become law, he believed were "ripe for decision” and while he was not optimistic, he was confident of a positive outcome.
According to research by the European Parliament, EU countries are losing out between €50 to €70 billion a year though multi nationals taking advantage of loopholes in countries tax regimes.
This Anti Tax Avoidance Package includes a list of measures taken by corporations to lower or avoid their tax liability involving inter-company loans, payments for intellectual property, moving ownership of the results of research to low or no tax jurisdictions.
The overall result if the measures are adopted would be that companies pay tax where they make their profits - rather than for instance where they are headquartered, or where a subsidiary in one country can charge one in another country large amounts for IP or interest on loans.
It would also boost transparency where national tax authorities would exchange information with one another on the operations of multinational companies in their country. This will allow them to see where exactly these companies are paying their tax, on what basis, and how much.
The base erosion and profit shifting (BEPS) standards agreed by the OECD countries last October - including Ireland - are optional and are being implemented by Ireland, while the EU proposals if and when agreed by the member states at Council level and the European Parliament would be mandatory.
The Irish Tax Institute said the proposals would affect companies across the entire EU and were a major step in turning the plans on corporate tax avoidance into actual EU law, and will ultimately impact multinationals and member states.
But left-leaning parties in the European Parliament said the proposals were weak and would not stop large corporations shifting their profits to low or no tax jurisdictions to avoid paying tax.