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MEPs Criticize Tax Rulings Info Exchange Proposals

by Ulrika Lomas, Tax-News.com, Brussels

16 October 2015


Members of the European Parliament have criticized the "limited scope" and proposed time scale of the European Commission's proposals for the automatic exchange of information on cross-border tax rulings.

On October 13, Parliament's Economic and Monetary Affairs Committee adopted a report on the proposals, with 49 votes in favor, zero against, and six abstentions. Report author Markus Ferber said: "If this is the final text, member states will have missed a great opportunity to create more transparency in taxation. National budgets will continue to suffer."

On October 6, European Union (EU) economic and finance ministers reached a unanimous agreement on the Commission's proposed amendments to Directive 2011/16/EU. The changes are aimed at removing obstacles that might hinder the effective and widest possible mandatory automatic exchange of information on cross-border rulings and advance pricing arrangements. They would remove EU member states' discretion as to what information is shared, when, and with whom.

Member states must transpose the new rules into national law before the end of 2016, and the directive will come into effect on January 1, 2017.

In their report, the MEPs recommended that the directive apply to all tax rulings, and pointed out that purely national transactions can also have cross-border effects. MEPs would like the directive to apply to all rulings that are still valid on the day it enters into force, rather than just those made after December 31, 2016. They are also concerned that the Commission will have only limited access to the information and not be permitted to act on the data it receives.

According to the committee, the directive should enter into force as soon as possible. The MEPs recommended that it commence on January 1, 2016. They said that information should be communicated "promptly after the ruling or price arrangement is issued" rather than "within one month following the end of the quarter during which the ruling was issued," as the Commission has proposed.

Ferber said: "We need an EU-wide systematic and mandatory procedure. For the moment, member states' tax authorities would not realize that tax ruling deals forged in other member states are undermining their own tax bases. Tax authorities should be obliged to exchange information on tax rulings and make them available to a central database at the European Commission."

"There is also a competition side to tax rulings. This is why the Commission must be empowered to access and use the data to investigate tax avoidance and dumping practices and to assess whether they are in line with state-aid rules. Why are member states clearly denying the Commission access to these data? Are they hiding something?"

TAGS: compliance | tax | European Commission | tax compliance | tax avoidance | law | budget | ministry of finance | tax authority | tax planning | transfer pricing | revenue statistics | European Union (EU) | Europe | BEPS

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