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.
Does Darwin's theory apply to taxation? Colin ponders...
The UK tax gap fell in 2014-15 to its lowest-ever level of 6.5%, revealed official statistics published today
Changes to the tax system is urged to support the growth of entrepreneurs, found a report from the Grant Thornton UK, the Institute of Directors, and the Prelude Group
The EC has been instructed to draft a European Union (EU) directive authorising an EU financial transaction tax, which would apply to ten of the EU’s 28 member states