Jean-Claude Juncker has blamed language barriers for the tax advantages big business gained in Luxembourg when he was the prime minister of the landlocked country.
Mr Juncker survived David Cameron's attempts to prevent him becoming president of the European Commission this summer, but now faces a scandal over suggestions that he encouraged tax avoidance during 18 years in office in Luxembourg.
There have been calls for Mr Juncker to quit, as the news has emerged at a time when tackling tax avoidance is topping the international agenda. The likes of Starbucks and Amazon have been come under fire for using legal tax avoidance ploys to boost profits.
At the G20 summit in Brisbane today, Mr Juncker said: "I [have] explained at length how in Luxembourg and in other countries not all of them speak in French and German. Things of that kind happens because of the discrepancy between national tax legislation."
Mr Juncker is pushing for greater tax harmonisation across Europe to make avoidance schemes more difficult to implement. He has been accused of making deals with the likes of Pepsi to help them save billions of pounds in tax in Luxembourg, with come companies paying an effective tax rate of just 1 per cent by pushing profits through the country.
Mr Juncker has previously argued that the circumstances complied with national legislation and international tax rules. He believes that dramatically differing international tax codes results in some countries offering far more advantageous tax rates and could be tackled by greater standardisation.
"What we are intending now is not full-fledged tax harmonisation in each and every detail but eliminating from our tax legislations the open gates [for tax avoidance]," he said. "I'm in favour of tax competition but I'm also in favour of fair tax competition."Reuse content