The European Union launches into it\’s attack against corporate tax avoidance.

More information: Provided by U-tax Accountancy Services

The EU (European Union)has taken steps to curb tax avoidance by global corporations. In recent weeks, criticism in the budget-strapped bloc as mounted over loopholes that are exploited by Apple, Google and other multinational companies.
The EU are attempt to close a loophole in taxation practices i the 28-nation bloc was originally opposed by countries who are benefiting from offering low corporate taxes to multinational companies such as Ireland, Malta and Luxembourg.
The bill was approve unanimously by all of the bloc\’s finance ministers.
The closure of taxation loopholes would contribute to greater fairness within the EU said Algirda Semeta EU Commissioner of Taxation.
The Union estimates that tax fraud and corporate cross-border tax avoidance schemes costs the bloc\’s governments up to £0.8 trillion.
Under new rules, multinational corporations are barred from shifting profits to low-tax countries to redefine their gains as tax-deductible loans to their subsidiaries. The tactic involves a loan that had the characteristics of debt in addition to equity so it can be treated as a tax deductible payment in one country and as a tax-deductible debt payment in one country and as a tax exempt dividend in another.
The commission said that if such a loan payment is tax deductible in the subsidiary\’s member state, it must be taxed where the parent was established.
The reform comes following reports that some multinational corporation had used the loophole to pay minimal taxes on their international operations.