“The European Commission will attempt to close a loophole that allows companies to cut their tax bill, a top EU official said on Monday, but the EU executive will first need to persuade member countries to back the change,” Reuters reports. “The Commission wants rules to prevent companies setting up ‘letter-box subsidiaries’ in countries, such as Ireland or the Netherlands, solely to qualify for a softer tax regime and cut their bill.”
“Algirdas Semeta, the EU’s taxation commissioner, wants to insert an anti-abuse clause by the end of next year, allowing authorities to target artificial ‘parent-subsidiary’ schemes that flout the spirit of the tax code,” Reuters reports. “Schemes used by Starbucks, Apple, Amazon and others, operating within the law to minimise taxes, put aggressive tax ‘planning’ at the top of the political agenda earlier this year.”
“But progress in tackling the problem is likely to be slow. Europe is torn between the demands of small countries, such as Luxembourg and Ireland, fiercely resisting change to their low-tax regimes which attract foreign investment, and states such as Britain and Germany, wary of driving away big employers,” Reuters reports. “Taken at face value, the global political direction towards tax reform is clear. But Semeta’s limited success so far points to the difficulties ahead.”
Read more in the full article here.
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