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EU lawmakers set up temporary tax-dodging panel amid criticism

By Foo Yun Chee

BRUSSELS (Reuters) - European lawmakers agreed on Thursday to set up a temporary committee to look into tax-dodging instead of extending the mandate of an earlier panel, drawing criticism that the new body could turn out to be toothless.

The European Parliament's special tax committee, set up in February in the wake of media reports about tax deals which helped hundreds of multinationals slash their tax bills to paltry sums, ended its work on Wednesday after issuing recommendations to crack down on tax evasion.

Parliament adopted non-binding recommendations by the committee that multinational companies should pay taxes in the countries where they make their profits instead of shifting them to low-tax havens.

The new, temporary panel is expected to continue the work of its predecessor over a six-month period. Lawmakers will decide on its exact function on Dec. 2.

European Parliament member Sven Giegold, of the German Green Party, who helped draft the proposal leading to the creation of the special committee earlier this year, said he would fight to ensure the new panel was equally effective.

"We will not accept any weakening of the mandate of the new committee, whose creation will already lead to unnecessary bureaucracy and delay," he wrote on his blog.

"Parliament's investigation cannot be deemed finished until we have established who bears political responsibility for the billion euro tax dumping of Google , Amazon , Facebook and hundreds of other multinationals," he said.

Greens leader Philippe Lambert criticised European Parliament President Martin Schulz for not extending the original panel's mandate.

The European Commission told the Dutch government last month to recover up to 30 million euros (£21.06 million) in back taxes from U.S. coffee chain Starbucks and issued the same order to Luxembourg over Fiat Chrysler Automobiles .

EU countries have in the past resisted any move against their tax regimes on the grounds these are sovereign issues.

(Reporting by Foo Yun Chee; editing by Adrian Croft)