EUROPE: 'The days are numbered for companies that avoid paying tax'

The European Commission has unveiled proposals for a new EU-wide rules on tax avoidance, after a week in which the tax affairs of multinational tech companies came under heavy scrutiny.

The new rules, introduced by European Commission member Pierre Moscovici at a press conference, will be legally binding, and require EU member states to “apply a mimium level of protection against avoidance … [to] safeguard the single market.”

There will be no mimium taxation level, however.

Moscovici also indicated that the European Commission intends to introduce further measures for tackling tax avoidance this year. This includes the “common consolidated corporate tax base,” which will require companies to file a single Europe-wide tax return.

“Let me put this in a nutshell,” said Moscivi. “The days are numbered for companies that avoid paying tax at the expense of others.”

There has been furious debate in Britain following the news that the UK Government has agreed to a £130 million tax bill for Google. Critics argue that this amounts to a 3% effective tax rate, and has been called “derisory” by politicians.

Apple (which, like Google, is headquartered in Ireland) is facing investigation by the European Commission over its tax affairs in Europe. Bloomberg has reported that the Cupertino company may owe as much as $8 billion in back taxes.

Moscivi declined to comment on Google’s tax bill when asked in the subsequent Q&A session. “We cannot comment on individual tax arrangements and agreements, not least because we have not seen the details of how the agreement was reached,” he said.

But he added: “The commission is clear — all companies must pay their fair share of taxes where they earn their profits.”

Measures included in the European Commission proposal are, per the press release:

  • legally-binding measures to block the most common methods used by companies to avoid paying tax;
  • a recommendation to Member States on how to prevent tax treaty abuse;
  • a proposal for Member States to share tax-related information on multinationals operating in the EU;
  • actions to promote tax good governance internationally;
  • a new EU process for listing third countries that refuse to play fair.

This story is developing …

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