EU proposes common tax rules to close avoidance loopholes

Tue Oct 25, 2016 10:53am EDT
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By Huw Jones

LONDON (Reuters) - Multinational companies would have to calculate their tax liabilities according to one set of rules across the European Union under proposals on Tuesday aimed at stopping them shifting profits to avoid taxes.

To close the loopholes offered by different national tax rules, the European Commission has proposed a mandatory common tax base for multinationals with total group revenues exceeding 750 million euros ($816 million) a year.

Tax experts said this threshold would snare low margin businesses that pose little tax risk, while more complex companies escape.

However, the EU executive sees benefits.

"We are proposing a system which can simultaneously support business, attract investors, promote growth and stop large-scale tax avoidance," EU Economic and Financial Affairs Commissioner Pierre Moscovici said.

Member states would be required to allow the same rate of depreciation for an asset and the same types of expense would be tax deductible.

The Commission said the proposal could lift investment in the EU by 3.4 percent, and growth by up to 1.2 percent if companies saved money by filing a single tax return for all their EU activities, cutting tax avoidance, Brussels said.

This is the second attempt at introducing a common tax base.   Continued...

The European flag flies outside of the La Canada shopping centre in Marbella, southern Spain January 23, 2013.  REUTERS/Jon Nazca