Socialists say Juncker credibility at risk over tax deals

(See related) (ANSA) - Brussels, November 6 - The credibility of Jean-Claude Juncker as the new president of the European Commission is at stake over the issue of corporations moving to avoid taxes, the leader of the Progressive Alliance of Socialists and Democrats in the European Parliament said Thursday.
    Italian Gianni Pittella said in a statement that Juncker, who was prime minister of Luxembourg from 1995 to 2013, "must show where he stands" on what some call legalized tax avoidance that occurs in Luxembourg and was revealed in the so-called "Luxleaks" of corporate tax files.
    "Is he on the side of nationalists, or the companies that are tax evaders," said Pittella, who is a member of Italy's Democratic Party (PD) from Basilicata.
    Almost 30,000 documents were leaked, outlining tax deals reached in Luxembourg with major multinational corporations accused of cross-border tax avoidance.
    Finance Minister Pierre Gramegna said Thursday that Luxembourg's practices are "perfectly compatible with all international conventions" but that authorities there recognize tax rules "can lead to a paltry payment of taxes by business and we believe that is not satisfactory".
    The issue drew scrutiny in September when the Organization for Economic Cooperation and Development (OECD), working with the G20 nations, agreed on draft measures to deal with multinational firms seeking to circumvent taxes by moving some operations to low-tax nations.
    The proposed measures were designed to ensure big multinationals shoulder a greater share of the tax burden.
    Many corporations currently arrange their affairs to avoid paying taxes in jurisdictions where they earn millions in revenues.
    Current international tax rules and treaties among nations have not kept pace with developments in the digital economy and innovations that have allowed tax avoidance, the experts say.
    Work on combatting tax avoidance began two years ago and in mid-2013, as part of the OECD project, the Italian government calculated that profitable multinationals including Amazon and Facebook had together paid just one million euros in taxes in 2012.
    Google has also been frequently named as an organization that avoids paying taxes through an intricate series of holding companies.