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28 January 2016

European Commission: New measures against corporate tax avoidance

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Commission's proposals aim for a coordinated EU wide response to corporate tax avoidance, following global standards developed by the OECD. New rules are needed to align the tax laws in all EU countries in order to fight aggressive tax practices by large companies.

As part of today's Anti Tax Avoidance Package the Commission adopted two legislative proposals that call on Member States to take a stronger and more coordinated stance against companies that seek to avoid paying their fair share of tax and to implement the international standards against base erosion and profit shifting.

The OECD has conservatively estimated that $100bn-$240bn is lost to global profit shifting every year – equivalent to between 4% and 10% of global corporate tax revenues. The European Parliamentary Research Service put the revenue lost to corporate avoidance at around €50-70 billion a year in the EU.

More precisely, the Commission proposed an Anti Tax Avoidance Directive with legally-binding measures to tackle some of the most prevalent tax avoidance schemes. Its Recommendation on Tax Treaties advises Member States on the best ways to protect their tax treaties against abuse, in a way that is compatible with EU-law.

The Commission also proposed a revision of the Administrative Cooperation Directive that seeks to boost transparency on the taxes that companies are paying. Under the proposed rules, national authorities will exchange tax-related information on multinational companies' activities, on a country-by-country basis.

Full press release

© European Commission

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