You are here

EU finance ministers to make progress against tax avoidance

Tuesday, February 21, 2017 - 21:50

24-41321534 - 27_01_2017 - BRITAIN-EU_IRELAND.jpg
European Union finance ministers hope to move closer to devising common rules to counter multinationals' tax avoidance and drawing up a common list of tax havens at a regular meeting in Brussels on Tuesday.

[BRUSSELS] European Union finance ministers hope to move closer to devising common rules to counter multinationals' tax avoidance and drawing up a common list of tax havens at a regular meeting in Brussels on Tuesday.

The meeting will aim to overcome different positions on how to tax the dividends of multinational corporations and on how to define a tax haven, part of an EU push to recoup revenues from wealthy individuals and companies that unfairly reduce their tax bills by shifting profits to countries with low or no taxation.

"We hope we will manage to clinch a deal," Maltese Finance Minister Edward Scicluna told reporters before the meeting. Malta holds the current six-month rotating EU presidency.

Ministers were upbeat about a deal on dividends taxation, known in EU jargon as hybrid mismatches.

sentifi.com

Market voices on:

"I expect we will have an agreement," Dutch Finance Minister Jeroen Dijsselbloem said.

The target was to stop multinationals from exploiting different rules on taxes and tax deductions in the countries where they operate, which have allowed them to drastically reduce their tax bills.

Last December, ministers failed to reach a deal on the issue, after a proposal put on the table by the then Slovak presidency and backed by Britain, was seen as a watering down of the plan by other ministers.

Mr Scicluna said that the deal may hinge on more coordinated rules to prevent multinationals from skipping dividends taxation altogether, but with a commitment to make sure that corporations will not pay double taxes under the new system.

Ministers are also expected to agree on the criteria to define a tax haven. Attempts to have a common EU list of"non-cooperative jurisdictions" have so far failed as several EU countries preferred to maintain their own, often empty, listing.

But the idea of setting up a common list has gained traction after several revelations of massive tax avoidance in countries, such as Panama or the Bahamas.

Countries that apply zero tax rates will not automatically be considered a tax haven. But they may be put under pressure, and even threatened with sanctions, if they do not cooperate with the EU on tax matters or if they encourage off-shore structures.

The list should be finalised by the end of this year. So far letters have been sent to 92 countries, including the United States, to start a screening of practices that could be seen as facilitating tax avoidance.

REUTERS

Nespresso
Pair your daily business read with the perfect cup of espresso.

Subscribe to The Business Times today to receive your very own Nespresso Inissia coffee machine worth $188.

Find out more at btsub.sg/btdeal

Powered by GET.comGetCom