Yesterday, the European Parliament discussed the European Commission’s plan to tackle the corporate tax avoidance, which currently costs European countries between 50 -70 billions in lost revenue a year.  New rules are needed to align the tax laws in all 28 EU countries in order to fight aggressive tax practices by large companies efficiently and effectively.

On 28 January the Commission presented its first measures, the Anti Tax Avoidance Package, which follows global standards developed by the Organisation for Economic Co-operation and Development last autumn. The Package calls on Member States to take a stronger and more coordinated stance against companies that seek to avoid paying their fair share of tax and to implement the international standards against base erosion and profit shifting.

Key features of the new proposals include:

• legally-binding measures to block the most common methods used by companies to avoid paying tax;
• a recommendation to Member States on how to prevent tax treaty abuse;
• a proposal for Member States to share tax-related information on multinationals operating in the EU;
• actions to promote tax good governance internationally;
• a new EU process for listing third countries that refuse to play fair.

Taxes will not be harmonised, but a common tax base will help EU Member States to agree on which categories of companies’ revenue they would levy their taxes on. In that way, all the measures together will boost transparency between Member States and ensure fairer competition for all businesses in the Single Market. In the light of this reform, MEPs adopted the first special committee’s report in November, calling for mandatory country-by-country reporting of profits and taxes by multinationals and they have also set up a special committee that will continue working on the issue until June 2016.

In the next future, two legislative proposals of the Package will be submitted by the Europan Commission to the European Parliament for consultation and to the Council for adoption, in order to develop a coordinated EU response to corporate tax avoidance

So far, initiatives launched by the Commission in 2015 to boost tax transparency and reform corporate taxation are already achieving results: the proposal for transparency on tax rulings was agreed by Members States and a number of other substantial corporate tax reforms have been put forward.