European Commission raises pressure on Ireland, the Netherelands, Luxembourg over tax practices

The European Commission (EC) has stepped up pressure on Ireland, the Netherlands and Luxembourg over their corporate tax practices, saying it was investigating deals struck by these countries with Apple, Starbucks and Fiat.

The EU was looking at whether the countries' tax treatment of multinationals, which helped to attract investment and jobs that might otherwise go to where the companies' customers were based, represented unfair state aid.

Corporate tax avoidance had become a top concern in recent years after reports of how companies like Apple and Google used complex structures to cut their tax bills.

In the current context of tight public budgets, it was particularly important that large multinationals paid their fair share of taxes, Reuters quoted commission vice president in charge of competition policy Joaquín Almunia as saying on Wednesday.

Though governments had promised to rewrite the rules governing international tax, however, according to experts, the EC would struggle to challenge deals that had been agreed to by Ireland, Luxembourg and the Netherlands under existing rules.

Turning the heat on agressive corporate tax planning, Almunia called for multinationals to "pay their fair share". According to the commission any special treatment granted to the two US corporations and the Italian automotive group's finance arm could breach EU rules on state aid.

Business leaders across Europe had focused attention on US-based corporations over their tax affairs, claiming some multinationals, particularly those trading online, competed unfairly by exploiting loopholes. Tax breaks are banned under Europe's state aid laws if they risked distorting competition.

Almunia said, in the current context of tight public budgets, it was particularly important that large corporations paid their taxes, adding under EU's state aid rules, national authorities could not take measures allowing certain companies to pay less tax than they should if the tax rules of the member state were applied in a fair and non-discriminatory.

The so called ''patent box" arrangements in nine European countries, which allowed lower tax payments on the profits from patented inventions and innovations and which were introduced in the UK in April 2013 would also be probed.