GENEVA

By Ilgin Karlidag

BRUSSELS

The European Union has said it is to present a "tax transparency package" aimed at curbing tax malpractice as Swiss police raided HSBC's Geneva HQ amid claims the bank laundered money.

The European Commission, the bloc’s executive body, said on Wednesday it would propose legislation next month to extend the automatic exchange of information on tax rulings among member states.

Pierre Moscovici, the Commissioner for Economic and Financial Affairs, Taxation and Customs, said in a statement: "Abusive tax practices and harmful tax regimes breed in the shadows; transparency and co-operation are their natural foes.

"It is time for a new era of openness between tax administrations, a new age of solidarity between governments to ensure fair taxation for all."

The statement came after the Geneva Canton public prosecutor launched an investigation into "suspected aggravated money laundering"  at the Swiss arm of international bank HSBC.

The probe was launched after a consortium of media outlets from 45 countries including The Guardian, BBC, Le Monde and the International Consortium of Investigative Journalists alleged the Geneva bank turned a blind eye to the illegal activities of arms dealers and aided rich wealthy people to evade taxes.

- 'Top priority'

The European Commissioner for the Euro and Social Dialogue, Valdis Dombrovskis, said: "A prosperous Europe needs fair, transparent and predictable tax systems for businesses to invest and for consumers to regain confidence.

"As part of our work for a deeper and fairer internal market, we want to establish greater tax transparency and ensure fairer tax competition, within the EU and globally."

The European Commission said its president, Jean-Claude Juncker "has made the fight against tax evasion and avoidance a top political priority".

However, Juncker himself came under scrutiny in November last year in an affair dubbed "LuxLeaks" after the International Consortium of Investigative Journalists accused hundreds of major corporations, including Pepsi, IKEA and FedEx of securing secret tax deals with Luxembourg when he was prime minister and finance minister of the state, saving them billions of dollars in global taxes. 

- 'Aggressive' tax schemes

Jean-Claude Juncker comfortably survived a no-confidence vote defeated by 461 votes to 10 in the European Parliament on November 27.

A later set of 54 Luxembourg tax documents released by the ICIJ expanded the list of companies involved by another 33, including The Walt Disney Co., chemical conglomerate Koch Industries Inc, private equity firm Warburg Pincus and Internet phone giant Skype.

The "Lux Leaks II" files showed aggressive tax structures were being brokered not only by PwC but also by Luxembourg-based law and tax firms and global accounting firms like Ernst & Young, Deloitte and KPMG.

EU member states share very little information about rulings concerning their corporate tax regimes, making it difficult for tax authorities to assess where a company's real economic activity takes place.