The European Parliament is closely examining the issue of tax avoidance, in particular through the Economic and Monetary Affairs (ECON) Committee and the Tax Rulings and Other Measures Similar in Nature or Effect (TAXE) Committee.
There is a clear message from the European Parliament that tax avoidance needs to be addressed. As highlighted in the TAXE committee's report, corporate tax avoidance has a direct effect on Member States budgets and the sharing of tax efforts across economic factors. It also creates competition distortions and unfair tax burden sharing among taxpayers. Citizens and SMEs shoulder a disproportionate burden, compared to large MNEs 32 . "[T]his situation risks feeding democratic mistrust and affecting overall tax compliance". 33
The lack of joint definition or guidelines in the EU when it comes to elements such as anti-abuse rules or notion of permanent establishment 34 is identified by the Parliament as an area where there would be a need for coherence at EU level. The fight against tax avoidance also requires action with regard to bilateral tax treaties and insufficient anti-abuse provisions therein. 35
The studies and in-depth analyses prepared for the EP shed light on aggressive tax planning techniques, and possible solutions. A paper by Vella presents "some of the most significant techniques and mechanisms used by MNEs for base erosion and profit shifting as identified in the BEPS project" 36 , i.e. exploitation of transfer pricing rules, debt shifting, hybrid mismatch arrangements, Tax Treaty abuse, artificial avoidance of Permanent Establishment status, and tax rulings. In another paper on patent box regimes, Evers recalls the usefulness of exit taxation on "the full earnings value of the [Intellectual Property] IP" 37 , although it is not easy, she points out, to identify the ‘true value’ of IP.
The Parliament supports the OECD/G20 BEPS Reports. However, as the OECD approach is based on soft law, it should be "complemented by a proper legislative framework at EU level to address the needs of the single market, e.g. in the form of an anti-BEPS directive going beyond the OECD BEPS initiative in areas that are not sufficiently covered". 38 The Commission should also envisage "areas in which the Union should go further than the minimum standards which the OECD recommends" 39 .
Enhancing transparency is important in order to increase "public accountability of MNCs and supporting tax administrations in their investigations." 40
The European Parliament has also looked into great details at the role of third countries in tax avoidance. It is committed to tackle the challenge posed by the so-called "tax havens". In its report on tax rulings, the Parliament has pointed out how lack of transparency in the global tax system enables multinational companies to limit their tax bill by shifting their profits outside the Union. To make progress on this front, the Parliament has invited the Commission to continue its work on a common EU approach towards third-country tax jurisdictions. The Parliament "reiterates that genuinely European lists, regularly updated and based on comprehensive, transparent, robust, objectively verifiable and commonly accepted indicators, would be more effective as a means of promoting good tax governance and changing tax behaviours towards and within those jurisdictions" 41 . In the same report, the European Parliament has also pointed out that the OECD approach to the matter cannot be considered sufficient, as it focuses on tax transparency and the exchange of information but do not sufficiently address the harmfulness of tax practices 42 .
