EC unveils Tax Transparency Package as measure to combat corporate tax avoidance

The European Commission has unveiled its Tax Transparency Package as part of its agenda to tackle corporate tax avoidance and harmful tax competition in the EU. A key element of this Package is a proposal to introduce the automatic exchange of information between Member States on their tax rulings, says EC's press release.

The move comes during ongoing investigations into a number of member states' tax regimes, with Luxembourg, Ireland and the Netherlands in focus. The Tax Transparency Package proposes that European governments automatically exchange details of tax rulings to try to tackle "aggressive tax planning".

The Commission is estimating whether the tax regimes of the EU nations amount to state aid. The plans for tackling corporate tax avoidance involve a proposal for a new law on tax data-sharing.

The body is concerned that tax rulings which give a low level of taxation in one member state can entice companies to artificially shift profits there, leading to serious erosion of possible tax revenues for other member states.

Pierre Moscovici, Commissioner for Economic and Financial Affairs commented that while avoiding tax is not illegal, people are running out of patience with corporate tax avoidance.

Such multinationals as Amazon, Apple, Fiat and Starbucks have been caught up in a Commission investigation into "aggressive tax planning" strategies, says BBC.

Member states are not allowed to grant companies tax advantages that distort competition under the European Unioun legislation.

Since 2013, the Commission has been investigating the tax regimes of certain member states, and at the end of last year widened the investigation to include all member states.

Eight months ago the Commission launched formal investigations into the tax paid by Apple in Ireland, Starbucks in the Netherlands and Fiat Finance in Luxembourg.

In October the Commission started a further investigation into Amazon's tax dealings in Luxembourg which led to calls for European Commission President Jean-Claude Juncker to be investigated over allegations he encouraged tax avoidance when he was prime minister of the country.

Despite this, the tax scandal failed to gain traction in the European Parliament.