* EU Commission presents tax avoidance action plan
* Reuters investigations show how Starbucks, Amazon saved
* EU reserves particular criticism for Switzerland
By John O'Donnell
BRUSSELS, Dec 6 European governments should
coordinate their efforts to root out tax avoidance costing them
around 1 trillion euros ($1.31 trillion) every year, the
European Union's executive body said on Thursday.
The European Commission said member states need to share
information better, introduce an EU-wide tax identification
number and devise common criteria for blacklisting tax havens.
The proposals were part of an action plan detailed by EU
taxation policy commissioner Algirdas Semeta on Thursday to deal
with inventive and increasingly common tactics used by big
companies and others to reduce their tax bills.
"Tax competition must not open the door to fraudulent or
abusive tax practices," Semeta said. A new framework would
result in profits being taxed in the state where the "actual
economic activity takes place".
The Commission intends to present its action plan to EU
finance ministers next year but is not aiming to persuade member
states to pass binding legislation.
The impetus to deal with the problem has grown as several
European countries try to increase tax revenues and cut spending
to rein in heavy debts.
A number of high-profile examples have hit headlines in
recent months, including one involving coffee chain Starbucks
A recent examination by Reuters of Starbucks' accounts
showed that the company had reported 13 years of losses at its
UK unit, even as it told investors the operation was profitable
and among the best performing of its overseas markets.
The chain's UK unit paid no corporation tax on its income in
the last three years for which figures were available.
Starbucks said on Thursday it could pay up to 20 million
pounds ($32.18 million) more in tax as it announced plans to
change its accounting practices, surrendering to criticism from
lawmakers, campaigners and the media.
A Reuters examination of Amazon's accounts showed how the
world's biggest online retailer had minimised corporate taxes by
setting up in Luxembourg, and channelling sales through its
In effect, Amazon used inter-company payments to
form a tax shield for the group, behind which it has accumulated
$2 billion to help finance its expansion. Amazon declined to
answer questions from Reuters about its tax affairs.
BusinessEurope, the lobby group that represents companies,
said it supported the Commission's initiative, but also called
for a simplification of the tax system across European Union.
Semeta suggested part of the blame lay on tax regimes
"artificially designed to steal tax bases or encourage
aggressive tax planning".
He rounded on non-EU state Switzerland as one country whose
policies encourage aggressive tax avoidance.
"I can openly say that we consider that several tax regimes
in Switzerland, according to our estimations, do not meet
criteria of the code of conduct on business taxation," he said.