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17 Nov 2014 12:01pm

Conservatives call for Juncker tax probe

Senior Conservative ministers have suggested the EU should investigate Jean-Claude Juncker over tax deals made while he was Luxembourg prime minister

The European Commission President is coming under increasing pressure over claims he encouraged tax avoidance and sanctioned sweetheart deals with several major businesses during his almost two decades in Luxembourg office. He faced fierce opposition at the time of his appointment to the Commission by David Cameron.

Earlier this month a joint investigation by the Guardian and the International Consortium of Investigative Journalists (ICIJ), leaked documents detailing Luxembourg’s rubber-stamping of avoidance schemes.

On Sunday Work and Pensions secretary Iain Duncan Smith, told the BBC, "This is a real moment for the European Union, for the commission, to show that it has the capacity and the determination to investigate its own.”

He added, “What is required from the European Commission is complete transparency." Conservative Party chairman, Grant Shapps also said he hoped the matter would be investigated.

The leak of almost 28,000 papers showed how more than 1,000 businesses had tax avoidance schemes approved by the government in Luxembourg, many with paperwork prepared by Big Four firm PwC.

Some 340 companies from around the world – including Pepsi, Ikea, JP Morgan, and Fedex – were also shown to have arranged boutique tax agreements with Luxembourg tax officials, with unique deals designed for each business. Complex agreements were arranged in which company headquarters from across the globe would set up local subsidiary companies alongside branches of domestic HQs in Luxembourg. 

At the G20 summit in Brisbane this weekend, Juncker denied any wrongdoing but said, “tax evasion sometimes happens,” while blaming language barriers for some of the tax rates enjoyed by multinationals.

He said, "I have explained at length how in Luxembourg and in other countries not all of them speak in French and German. Things of that kind happens because of the discrepancy between national tax legislation."

“This has to be avoided. Things of that kind happen because of the discrepancy between national tax legislation. What we are intending now is not fully-fledged tax harmonisation in each and every detail but eliminating from our tax legislations the open gates [for tax avoidance]. I’m in favour of tax competition but I’m also in favour of fair tax competition.”

Raymond Doherty

 

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