Smaller and peripheral EU countries should not be denied the remaining flexibility in tax policies, former Prime Minister Alfred Sant said.

He told the European Parliament in Strasbourg during the debate on the 'Commission decision adopted on the Corporate Tax package' that it was unfair to impose tax harmonisation to claim to curb tax evasion by multinational companies.

MEP Sant said the Commission decision on the corporate tax package was welcomeas long as it introduced better transparency in tax matters over the European Union.

“However, where it serves as part of a wider programme to introduce harmonisation of taxation across member states, the package must be critically scrutinised.  Member states, especially in the eurozone, are implementing uniform rules in financial and economic decision making.

“This is working to the advantage of members having better economic endowments. One cannot deny to those who have less endowments the remaining flexibility in tax policies, especially smaller and peripheral countries,” he said.

Dr Sant said current accounting systems to measure profits and expenses dated from when manufacturing was the main sector of economies. As services and digital activities, accompanied with a globalised mode of production and marketing, became increasingly predominant, the task of determining profits and expenses was now much more complex.

Dr Sant said that the easiest way to curb tax evasion by multinational companies was to impose tax harmonisation, using existing accounting methods.

“This is unfair.Indeed, the characteristic of any corporate tax package should be flexibility, equally applicable to all, not only to the bigger economies as has happened with the ‘Stability and Growth Pact’ rules,” he said.

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