Alfred Sant: EU tax transparency yes, harmonisation no

A move to make tax matters across the EU more transparent should not become an exercise in tax harmonisation, Labour MEP Alfred Sant has warned.

The former prime minister said he supported tax transparency measures but objected to harmonisation of taxes.

Sant was speaking at a conference in Brussels entitled ‘Building an EU tax system’ organised by the European Tax Adviser Federation.

European tax commissioner Pierre Moscovici was also present for the conference that discussed the role of tax intermediaries in “a fairer EU tax system”.

Moscovici said last week the European Commission was considering proposals to trigger a never used article in the Lisbon treaty to circumvent the veto power of member states on tax matters to push for reforms.

Countries like Malta, Ireland and Luxembourg have long objected to moves by larger member states to harmonise corporate taxes across the bloc, arguing that taxation was a tool for them to attract investment to the periphery of Europe.

Finance Minister Edward Scicluna warned that removing the veto on taxation matters would be crossing a red line and impinging on national sovereignty.

At the conference, Sant said the proposed transparency legislation was a step forward towards defining and regulating how intermediaries will work.

Asked how corporations will react, Sant said there could be “psychological reactions” from clients but insisted “not all corporations are immoral or out to cheat”.

He said it was normal that corporations wanted to minimise their tax bill. “The question is whether they do it legally or not and I believe that quite a number of corporations want to have tax planning that is legal and transparent.”

MEPs will be proposing amendments to the Tax Directive during discussions to start on Thursday at the Economic and Monetary Affairs Committee in the European Parliament.

The directive deals with the collection by tax authorities of reportable cross-border tax arrangements designed by intermediaries.

These arrangements are reportable if they tick a number of features indicating potential tax abuse.