By Julia-Ambra Verlaine 

BRUSSELS--European Union finance ministers on Tuesday agreed to more measures to stop international corporations from cutting their tax bills.

The proposed rules would deal with several legal loopholes that allow multinationals to avoid taxation--such as devices to shift profits and move debt to countries outside the EU where there are more generous interest deductions.

EU officials said the rules would ensure that companies didn't take advantage of so-called double non-taxation agreements--which were originally intended to ensure a company didn't pay tax in two different countries, but are currently being aggressively exploited.

The accord is part of a broader clampdown on tax avoidance and seeks to prevent companies from reducing tax liabilities by using arrangements with jurisdictions such as Panama and the Isle of Man.

The agreement expands a first package of standards agreed in June that included rules discouraging multinationals from "profit shifting"--companies' use of legal structures to record profits in the lowest tax jurisdictions regardless of where they are generated--but only within the EU.

"The EU is at the forefront of the fight against tax avoidance", said Edward Scicluna, finance minister for Malta, which currently holds the EU's six-month rotating presidency.

But some European countries--notably Luxembourg and Belgium--are wary of being what one minister called the "star pupil" when it comes to implementing global tax avoidance standards, fearing the EU could put itself at a competitive disadvantage globally and alienate itself from the U.S.

"It is high time we look around us at what others are doing," Pierre Gramegna, Luxembourg's finance minister, told his peers in Brussels. "What is key here at the end is that we have a level playing field. We must make sure others are following, that we are not alone out there implementing base erosion and profit shifting."

European countries have been trying to rein in corporate tax avoidance by multinational firms for the better part of five years, both by pushing to change international rules and by cracking down on companies that have struck alleged sweetheart deals in countries such as Luxembourg that allowed them to pay little tax in the bloc.

Part of that effort has included high-profile investigations by the EU's competition watchdog into some member states' tax arrangements with U.S. multinationals, such as McDonald's Corp. and Apple Inc.. Apple was ordered by the EU last year to pay Ireland as much as EUR13 billion ($13.8 billion) in allegedly unpaid taxes.

The finance ministers also discussed the creation of a so-called blacklist of jurisdictions that don't meet the bloc's taxation standards--or as Dutch Finance Minister Jeroen Dijsselbloem put it, of "countries that are not very cooperative on the field tax of evasion."

Pierre Moscovici, the European commissioner for taxation, said: "This is part of the battle we have been fighting since this commission took office. The commission is now preparing a way to list tax havens--we are putting in place a complete arsenal piece by piece."

Tuesday's tax rules are expected to come into effect between January 2020 and January 2022.

--Sam Schechner in Paris contributed to this article.

(END) Dow Jones Newswires

February 21, 2017 09:10 ET (14:10 GMT)