OECD nations, including Canada, signed a deal to share tax information on multinationals in an effort to curb tax avoidance. The EU is proposing its own plan to share information. (Shutterstock)
The European Commission plans to step up efforts to tackle tax avoidance, including a proposal for tax authorities to share information on the tax profile of multinational companies.
Saying billions of euros are lost every year to "aggressive tax planning" by multinationals, the European Commission plans to close tax loopholes and scrutinize special "sweetheart" tax deals offered by some countries.
The idea is to make it harder for firms to hide money in tax havens or play one country's tax authority against another.
The proposals include:
- Recommending ways to block the most common tax avoidance methods.
- Recommendations to member states on how to prevent tax treaty abuse.
- A proposal to share tax-related information on multinationals in the EU.
- Listing third countries that refuse to play fair.
Thirty-one nations in the OECD signed a deal on Wednesday for their tax authorities to share information on global companies.
Canada signs to OECD plan
Canada is a signatory to the deal and will begin sharing information by September 2018.
U.K. Chancellor George Osborne has recommended that such information be made public, to put pressure on the companies involved.
European Union authorities in Brussels also said they were ready to investigate the British government's tax deal with Google, which has been criticized for not demanding enough from the internet giant.
After a six-year investigation, Google agreed to pay 130 million pounds in taxes, an amount Labour critics say amounts to about 3 per cent of its U.K. profits.
"The commission will investigate the UK deal with Google if the need arises," said Pierre Moscovici, Europe's most senior tax policy official.
Common loopholes
"However, the commission is clear that all companies must pay their fair share of taxes where they earn their profits."
Among the most commonly used tax loopholes to be closed is the practice of setting up a subsidiary in a non-European tax haven, which is used to pay dividends back to the European parent company that are not subject to tax.
Companies also will no longer be able to shift profitable intellectual property that has been mostly developed in Europe to a low-tax jurisdiction to avoid paying tax, a common practice by tech and internet companies.
The EU also is proposing a catch-all rule empowering governments to close down new loopholes devised by creative accountants.
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