The European Union finance ministers recently agreed to push member states to exchange information on tax deals with some of the world’s biggest multinationals to address the growing issue of tax avoidance in Europe. The tax information gathered from tax deals will not be available to the public, only tax authorities will have access to this critical data. The agreement is slated to take full effect by Jan. 1, 2017.
The New York Times reported that the legislation was passed so national tax regulators would cut back on offering selected tax arrangements to companies. The law would also require that member states transmit information about special corporate tax deals twice per year to national tax authorities over an encrypted email system and eventually to a main database, which stores all the information. The Commission will be permitted to take legal action against states that ignore or decline to provide more information about a certain tax agreement.
Pierre Moscovici, the European commissioner for financial affairs is hoping that this move will drop the axe on “obscure tax agreements between companies and authorities which can facilitate tax abuse,” he said at a news conference.
For the European Competition Commissioner Margrethe Vestager, this law will make some ongoing investigations much easier. In May, Vestager delayed taking further action on tax probes against Amazon in Luxembourg and a unit of Fiat, Apple in Ireland and Starbucks in the Netherlands since obtaining information has been tougher than she expected. The investigation focuses on the selective tax arrangement between these countries and the multinationals that are not available to competitors.