Juncker defends record after 'secret tax deals' report
EC President says his actions 'complied with international rules' during his period of office in Luxembourg when corporate tax deals were struck
By Ilgin Karlidag
BRUSSELS
European Commission President Jean-Claude Juncker has defended his actions as Prime Minister and Finance Minister of Luxembourg following reports secret deals were arranged with multinational corporations under his tenure to enable them to avoid paying taxation.
His comments came on Wednesday nearly a week after an investigation by the International Consortium of Investigative Journalists (ICIJ) alleged hundreds of big-name corporations like Pepsi, IKEA and FedEx had secured secret deals with the tiny EU state which saved them billions of dollars in global taxes.
The report sparked anger around Europe, where most EU citizens are undergoing government-imposed "austerity measures", with some MEPs accusing Juncker of hypocrisy and calling on him to account for his actions.
But in an unexpected appearance before journalists at the European Commission on Wednesday, Juncker said: ''Everything has been in compliance with national legislation and international rules that apply in this matter."
''The national rules differ from member state to member state; sometimes the results of that is a tax rate not fully in compliance with the concept of fiscal fairness," he said.
- Guarantees demanded
He added that interactions between national rules in some member states and national rules in others, could lead to low tax rates.
He told reporters that, in November 1997, he had ensured the European Council would adopt a code of good conduct on unfair tax competition.
''The application of that code has led to a number of member states to modify a large proportion of their [administrative] practices and legislation,'' Juncker said.
Danish MEP Rina Ronja Kari, from the Danish anti-EU party People's Movement told the Anadolu Agency last Thursday when the report was published that she would seek support for a no-confidence motion against Juncker who took office as the President of the European Commission on Nov. 1.
Danish MEP Jeppe Kofod demanded guarantees that Jean-Claude Juncker had no knowledge of wrongdoing.
Margaret Hodge, the Chairwoman of the U.K.'s Public Accounts Committee, accused Juncker of hypocrisy and demanded he explain whether he personally authorized the tax avoidance schemes.
- Drastic tax reductions
Gianni Pittella, leader of the Group of the Progressive Alliance of Socialists and Democrats in the European Parliament, or S&D, told Anadolu Agency (AA): “As the new President of the European Commission, the credibility of Jean-Claude Juncker is on the line."
"He must show whose side he is on. Is he on the side of European citizens or corporate tax dodgers?"
According to the ICIJ, the leaked documents revealed how hundreds of companies arranged specially-designed structures with the Luxembourg tax authorities from 2002 to 2010.
Companies such as vacuum cleaner firm Dyson and Danish television company TDC worked with the Luxembourg tax authorities on arrangements which resulted in billions of dollars' worth of savings for the companies and a similar loss of taxes in the respective countries where they were based.
The legal – but secret - deals featured complex financial structures designed to create drastic tax reductions.
- 'Illegal' deals
The companies allegedly involved names such as Pepsi, Ikea, AIG, Amazon, Accenture, Burberry, Procter & Gamble, Heinz, JP Morgan, Deutsche Bank and FedEx.
Documents from buyout firms Blackstone and Carlyle were also listed.
The EU Commission has opened investigations against other companies using similar tax arrangements in Luxembourg.
European regulators launched inquiries on June 11 into the tax practices of Apple, Starbucks and Fiat following allegations they had negotiated ''illegal'' deals with the governments of Ireland, the Netherlands and Luxembourg.
The former Commissioner for Competition, Joaquín Almunia, called for a restraint on corporate tax planning and said all multinational companies should "pay their fair share".
