European Union finance ministers have agreed on a proposal which requires governments to share information on tax rulings, in an effort to curb aggressive corporate tax planning by multinationals.

It will require member states to automatically exchange information on cross-border tax rulings in addition to advance pricing arrangements. The rule will also apply to all tax rulings offered five years before the directive enters into force.

S.M.E.’s which have received rulings before April 2016 will be exempted from the regulation, except for those involved in financial or investment activities pd039bn.

Pierre Moscovici, the EU commissioner said

The new rules would promote tax transparency and fairness. Today’s agreement means an end to obscure tax agreements between companies and authorities which can facilitate tax abuse. It means more openness and cooperation between member states on corporate tax rulings without any discretion on what information is shared and with whom.

Meanwhile, as Luxembourg which currently holds the presidency of the European Union is awaiting the outcome of a European Commission probe into tax rulings it offered to Fiat and Amazon its finance minister Pierre Gramegna, welcomed the move saying that

Companies had avoided paying large tax bills at a time when EU citizens had made financial sacrifices during the crisis. That really has become intolerable to the public at large or anyone observing this.