MEPs call for more transparency for trust funds and foundations, common rules for “patent box” tax reductions on intellectual property earnings
THE EUROPEAN COMMISSION’S suggestion for a European-wide anti-tax avoidance directive was heralded by political figures at the European Parliament yesterday, but MEPs are still pushing for stricter limits against corporate tax avoidance
The EU anti-tax avoidance directive was welcomed by Parliament in a resolution voted on Wednesday in Strasbourg.
However, MEPs want to push through stricter limits on deductions for interest payments and tougher rules on foreign income.
MEPs called for more transparency for trust funds and foundations, common rules for “patent box” tax reductions on intellectual property earnings, and an EU blacklist of tax havens and sanctions against uncooperative jurisdictions.
The agreed European Commission proposal builds on the principle that tax should be paid where profits are made and includes legally-binding measures to block the methods most commonly used by companies to avoid paying tax.
It also proposes common definitions of terms like permanent establishment; tax havens, minimum economic substance, transfer prices and a number of other terms hitherto open to interpretation.
Further recommendations include:
In January, the European Commission proposed new rules to restrict companies shifting their profits to low tax jurisdictions as part of a package of measures aimed at curbing multinational companies’ aggressive tax practices.
It called on member states to take a stronger and more coordinated stance against tax avoidance and suggests that tax authorities share tax-related information on multinationals operating in the EU, as agreed by 31 countries in a deal with the OECD.