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.
Companies must report on their complex financial structures including offshore accounts and notify HMRC
An examination by the Public Accounts Committee (PAC) has revealed serious concerns relating to HMRC’s plans
Andrew Tyrie suggests there will not be enough time to implement Making Tax Digital (MTD) by April 2018
The ACCA has announced a partnership with UK research and development tax reclaim specialist RD Tax Solutions