EU leaders look to end Apple-style tax avoidance schemes

Tue May 21, 2013 4:18pm EDT
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By Luke Baker and Mark John

BRUSSELS/PARIS (Reuters) - Growing concern in European capitals about aggressive tax avoidance by high-profile corporations such as Amazon, Google and Apple looks set to steal the agenda of a European Union summit in Brussels on Wednesday.

The summit was originally called to discuss energy policy and tax coordination, but press reports in Britain, France and the United States exposing how little tax major international companies have been paying by carefully structuring their European operations has forced the issue up the agenda.

France and Britain in particular have grown concerned by the sheer scale of the legal tax schemes, with a U.S. investigation revealing on Monday that Apple Inc (AAPL.O: Quote) had paid just 2 percent tax on $74 billion in overseas income, largely by exploiting a loophole in Ireland's tax code.

That followed reports that the British unit of Amazon (AMZN.O: Quote) paid just $3.7 million tax on 2012 sales of $6.5 billion, and similar revelations concerning Google's (GOOG.O: Quote) and Starbucks's (SBUX.O: Quote) UK operations.

In all, officials have said that tax avoidance and evasion costs the EU around 1 trillion euros a year.

"A lot of these revenues (from the digital economy) are not getting taxed," said a French diplomat briefing reporters in Paris ahead of the EU summit. "We need to find a way of bringing home the tax on these activities."

Officials said French President Francois Hollande could raise the issue with the EU's 27 leaders, although it was unclear what agreement could be reached with little advanced preparation and just four hours of talks scheduled.

A draft of the summit's declaration, which is agreed in advance but can be changed, set out nine specific proposals for strengthening tax policy and coordination, including fighting tax avoidance schemes and the process of routing profits abroad.   Continued...

Fencing used for construction of the Central Subway obscures Apple's flagship retail store in San Francisco, California May 15, 2013. REUTERS/Robert Galbraith