Luxembourg Prime Minister Xavier Bettel said he was firmly opposed to harmonising tax policies in the EU, a report said Wednesday, hitting back after an investigation exposed his tiny country as a global tax haven.
Jean-Claude Juncker, Bettel's predecessor and new European Commission president, is under pressure after it was revealed that Luxembourg authorities agreed hundreds of tax deals to major companies, including Pepsi and Ikea, while Juncker was premier.
In response, Juncker, who led Luxembourg for 19 years, promised a push by Brussels to better harmonise tax policies across the 28-nation EU, an effort Bettel warned against in an interview with Belgian daily L'Echo.
"To say that everyone within the European Union must move toward a single tax policy with the same tax rate, that I'm against," Bettel said.
"This competence belongs to the member states," he said.
As part of his harmonisation scheme, Juncker has tasked economic affairs commissioner Pierre Moscovici to draw up plans to create an EU-wide automatic exchange of information on tax arrangements.
For now, EU countries can keep secret their corporate tax deals, known as "tax rulings", allowing companies to shop around and "arbitrate" between different national tax regimes.
Bettel defended the tax ruling practice, and even suggested he would increase staff at the relevant tax authority "due to the volume of work" involved.
But he acknowledged that more transparency could be necessary.
"The debate isn't about giving the same fiscal conditions to all, but to know who is doing what," Bettel said.
The comments come just days after leaders at a G20 summit in Brisbane, Australia greenlit plans to fight tax evasion, including rules demanding further transparency on tax rulings.
Juncker, who attended the summit, faces a confidence vote in the European Parliament next week after eurosceptics filed a motion about Luxembourg's tax breaks for global firms.
He is almost certain to survive the vote, triggered by eurosceptic and far-right parties.