Multinational corporations have long been in the sights of European Union authorities due to the steps they take to reduce their tax bills.

In a new legislative package to be unveiled on Jan. 27, the EU executive arm will table "a set of measures to impose to member states to adapt their domestic corporate income tax legislation to have a system which is stronger to tackle tax avoidance schemes," an EU official told a news conference.

Measures will be aimed at curbing specific tax avoidance schemes such as "profit shifting", whereby multinationals artificially move their profits to low-tax countries, a second official said.

Other schemes to be targeted are those based on "excessive debt financing", with which corporations shift their debt to countries where interests on their debt are tax-deductible.

This scheme unfairly reduces companies' tax bills, officials said. It also creates excessive debt burdens and keeps companies away from other sources of financing such as equities, which are not usually tax-deductible.

Also among the tax proposals are measures to allow national tax administrations to access the financial data of companies operating in their territories, in a further bid to discourage tax avoidance.

The Commission will also push member states to find common definitions of several financial products and instruments, to avoid for instance a hybrid tool being labelled debt in one country but equity in another, creating distortions in the EU market and unfair tax advantages.

On Jan. 12, the EU commissioner in charge of taxation, Pierre Moscovici, told European lawmakers that the new legislative package will in some ways go beyond the voluntary guidelines agreed by the G20 group of the world's largest economies and by members of the Organisation for Economic Co-operation and Development.

The Commission proposals will need the approval of all 28 EU states to become law. Tax issues are usually very controversial because are seen in many countries as purely national prerogatives.

Several EU attempts at common legislation in the tax sector have failed in the past. But EU officials are confident that the package to be proposed next week will be agreed quickly by member states, probably within the current Dutch presidency of the union which ends in July.

(Reporting by Francesco Guarascio; Editing by Hugh Lawson)

By Francesco Guarascio