EU member states should "all work in the same direction" to tackle the issue of tax evasion, EU Commissioner for Taxation Algirdas Semeta has said, following this morning's meeting of EU finance ministers in Vilnius, Lithuania.
He said there had been a shift this year in the EU’s fight against tax evasion, as member states signed up to the automatic exchange of information regarding the tax affairs of individuals.
While Minister of State Brian Hayes addressed the meeting, he was not asked about this week's reports that the European Commission had begun a preliminary inquiry into its tax practice, according to people who were present at the meeting.
Mr Hayes told EU counterparts that Ireland was committed to the highest standards on tax transparency, including those set by the OECD and G20, though he warned of the difficulties involved in the automatic exchange of information in light of the digital economy.
Speaking yesterday evening in Vilnius, Mr Hayes said Ireland had “nothing to hide” in relation to its tax policy.
“We are very confident that any international scrutiny around [Ireland’s tax code] will stand up to the highest standards,” he said. “The Commission is looking for information [...] I welcome this. It’s a good thing. The more international bodies, such as the OECD, that look at our tax systems, our statute-based tax code, the better will be the transparency of the Irish tax system . We’ve nothing to fear.”
While MEP Sharon Bowles, chair of the European Parliament's economic and monetary affairs committee, raised concerns about this week's reports of a preliminary tax inquiry by Brussels during this morning's meeting, the specific tax situations of individual countries was not raised. The meeting was also attended by the head of the OECD, Angel Gurria.
Speaking to The Irish Times, Lithuania’s finance minister, who chaired the meeting, said there was no question of a challenge to individual countries’ tax practices. “There is widespread acceptance that corporate tax is an issue for individual member states. Indeed, we strongly believe that each EU state should be able to compete for investment based on their tax rate. Lithuania has a relatively low corporate tax rate of 15 per cent,” he said.
The European Commission is keen to tackle the issue of tax evasion amid widespread public concern about the tax practices of multinational companies following a number of high-profile disclosures of aggressive tax-planning by companies such as Starbucks, Amazon and Apple.
While the EU has little power over the tax rates of member states – though the European Council can exert political pressure on countries to change their tax structures - its competition division has begun an inquiry into whether Ireland, Luxembourg and the Netherlands offered any specific deals to companies in a bid to attract investment.
This could result in Ireland being forced to recoup money from the beneficiaries of any tax deal that is found to be in breach of EU competition law.
Brussels has also moved to improve so-called “automatic exchange of information” among member states which would force countries to disclose details of the funds held by non-nationals in each country.
Austria and Luxembourg, which have traditionally had strong bank secrecy rules, agreed to sign up to greater disclosure earlier this year, though they have called for similar rules to be required in other jurisdictions such as Switzerland and the Channel Islands.
