EU finance ministers back efforts to fight tax avoidance by multinationals

European finance ministers have backed efforts to fight rampant tax avoidance by multinationals in the wake of the LuxLeaks scandal.

But European Union members face tough negotiations to work out the details.

Under a new plan the bloc’s 28 countries would share tax deals agreed with some of the world’s biggest multinationals.

This would end the secrecy that allowed member states to often compete against each other to attract business and investment.

The commission, the EU’s powerful executive arm, introduced the plan to ministers meeting Riga.

“Everyone agreed. No ‘yes but’, no conditions,” said French Finance Minister Michel Sapin after the talks.

The plan, which now faces months of arduous negotiations, targets so-called tax rulings, secret deals at the heart of the LuxLeaks scandal.

The scandal last year revealed that some of the world’s biggest companies, including Pepsi and Ikea, had lowered their tax rates to as little as one percent in secret pacts with tax authorities in Luxembourg.

The revelations were unearthed by a consortium of investigative journalists.

It is a huge embarrassment to Jean-Claude Juncker, the then-newly installed Commission head who presided over the tax pacts for almost 19 years as Luxembourg prime minister.

Under the new regime proposed by the Commission, member states would be forced to reveal tax rulings made with companies to other bloc members automatically every three months.

This proposal “is simple, practical, has a swift application set for January 2016, and it’s in reality revolutionary and I’m weighing my words,” said EU Economics Affairs Commissioner Pierre Moscovici.

Ironically, the Luxembourg government will be in charge of shepherding the negotiations from July when it takes over the EU’s rotating presidency from current holder Latvia.

Ministers from countries under fire for their tax practices, Netherlands, Ireland, and Luxembourg, strongly backed the deal.

The EU has launched fair competition probes against those countries, suspecting that tax rulings provided multinationals such as Apple, Starbucks and Amazon violated the bloc’s single market.

Diplomatic sources said that several member states expressed questions about the scope of the transparency that could punish smaller countries that have a greater dependence on cross-border trade.