BRUSSELS has drawn up plans to foil tax loopholes used by multinational companies in cross-border financing structures as it looks to raise billions more in revenues in corporate taxes across the EU.
The move follows increasing public pressure over tax avoidance and would impinge on one of the most common forms of avoidance activity used by large businesses, the Financial Times reports.
The ‘hybrid’ structures targeted allow companies to take advantage of mismatches between different countries’ tax regimes in order to avoid taxation. OECD plans to combat the practice – among others – are being provided to various tax authorities around the globe.
Investment bank Citigroup warned investors in September that many could expect tax bills to rise “significantly” using the hybrid structures.
The plans could have implications outside Europe, too. University of Southern California law professor Edward Kleinbard told the FT the existing system essentially provided a subsidy to European companies for the acquisition of US businesses.
“The result is global inefficiency and a very large shortfall in tax revenues around the world,” he said.
HMRC is continuing to ramp up the number of raids on premises it carries out as part of criminal investigations, searching 761 properties in the last year
Lord Howard Leigh of Hurley discusses the government’s initiatives to mitigate tax avoidance and evasion
Top 50+50: Demand for tax advisory services remains high, but fee pressure is expected in relation to compliance services
The demand for tax advisory services remains high and this looks to continue; but fee pressure is expected in relation to compliance services as the “Making Tax Digital” initiative is rolled out,
While some resistance to change is to be expected, the degree of controversy surrounding HMRC's Making Tax Digital proposals has surprised the government