EU proposes minimum corporate tax under global deal

EU finance ministers will discuss the proposal already in January. The commission is aiming for an agreement between the EU governments and the European Parliament under the upcoming French EU presidency.

The goal is to meet the globally-agreed deadline of 2023 for the entry into force of the new rules.

"In October of this year, 137 countries supported a historic multilateral agreement to transform global corporate taxation," economic commissioner Paolo Gentiloni told reporters.

That deal of more than 130 countries sets out to make sweeping changes on how to tax big global companies, including the 15 percent minimum rate to discourage multinationals from parking profits in low-tax countries.

"It is high time for global taxation to change," Gentiloni said.

"Recent investigations such as OpenLux or Pandora Papers were a reminder of the injustices that characterise our economic system today," the commissioner said, referring to investigative journalistic projects uncovering tax havens and tax-evasion practices.

To reduce the impact on groups carrying out real economic activities, companies will be able to exclude from tax calculations an amount of income equal to five percent of the value of tangible assets, and five percent of payroll, the executive said.

For a transition period of 10 years, the exclusions will be higher, starting at eight percent of tangible assets and 10 percent of payroll that will gradually decline annually.

Three EU member states - Ireland, Hungary and Estonia - previously did not join the deal, but came around to the agreement in October.

Asked about possible future holdouts among EU countries, Gentiloni argued the EU is not harmonising tax rules.

"We are not abolishing tax competition. We are not introducing a harmonisation of corporate taxation in the EU, we will still have different level of corporate taxation in different countries. We are introducing a ceiling, a limit to the race to the bottom," the Italian commissioner said.

Letterboxes cleared up

The commission also proposed measures to better detect shell companies, and letterbox companies which do not carry out any real economic activities, to prevent them from receiving tax advantages.

The new transparency standards would help national authorities identify shell companies through a system of criteria such as income, transactions and management.

According to the proposal, EU countries can request other members to conduct tax audits of companies.

Tax-dodging costs the bloc to up to a €1 trillion in income each year, the bloc estimates.