Jean Claude Juncker, the President of the European Commission, has responded to criticisms of Luxembourg’s tax system while he was in government.
The former Prime Minister said he wished his government had legislated to to give it more control of tax deals by international companies. He said the tax structure was a way to diversify Luxembourg’s economy, which had become over-reliant on the banking sector.
Leaked documents had revealed that a number of companies had made minuscule tax payments on profits. Juncker admitted, in his most detailed comments to date, that more should have been done to keep an eye on proceedings. He was, however, somewhat unrepentant:
I would do exactly the same, because we had no other choice than to diversify our economy. But I would have had a more precise look at these tax rulings... I would have changed the law allowing the finance minister to be involved, which our law does not allow.
I made it perfectly clear, because this is my conviction, that the country of the profit has to be the country of taxation. We didn’t have a policy which aimed at harming the tax interests of other countries. That was not what we were intending to do. We were, for a different reason, trying to attract future-oriented companies like Amazon, AOL and others to Europe and to Luxembourg. The related tax decisions were taken by the tax administration and not by the government.
The questions are nothing new: Juncker has been facing don accusations since March, when he announced he would run for the presidency of the European Commission.