EU unveils draft laws to end sweetheart tax deals

BRUSSELS — The European Union plans to oblige member countries to share details of tax agreements made with big companies and end the practice of sweet deals made in secret.

The EU's executive Commission unveiled yesterday draft laws that would require countries "to automatically exchange information on their tax rulings" every three months.

EU countries rarely share information about their tax decisions and are often unaware of rulings made by their partners, which creates a gap that some multinationals exploit.

The EU's top economy and finance chief, Pierre Moscovici, said "it's high time to re-establish a tax balance and for companies to pay what they owe."

The move comes after the so-called LuxLeaks allegations about sweet deals for multinationals with offices in Luxembourg. In February, the EU set up a special committee to look into national tax rules following the revelations.

The Commission, which polices EU laws and drafts new legislation, also opened tax probes last year into Apple in Ireland, Starbucks in the Netherlands and Amazon in Luxemburg. It is also looking into tax provisions in Belgium.

It believes that many multinationals are taking advantage by shifting profits between countries and that this deprives EU governments of tax revenues.

Tax rulings are the confirmation or assurance that authorities give to tax-payers on how their taxes will be calculated.

The new legislation would force national tax authorities to send a short report about all cross-border tax rulings they have issued. EU partners could then request more information if required, the Commission said in a statement.

The obligatory exchange of information would encourage "healthier" tax competition and help countries "to detect certain abusive tax practices by companies and take the necessary action in response," the statement said.

The draft legislation must be endorsed by member countries and could enter force on Jan. 1, 2016.

In the future, the EU plans to draw up transparency requirements for companies, including the public disclosure of certain tax information.