Multinationals must pay tax where they make profit: EU's Moscovici

[PARIS] Multinationals must pay taxes where they earn profits and stop using aggressive tax optimisation schemes, the European Union's Economics Commissioner Pierre Moscovici said on Monday.

Mr Moscovi told French radio RTL that the EU had to put a stop to the phenomenon of companies paying little or no tax in the countries in which they operate, by using subsidiaries in other countries set up specifically for tax reasons.

"It is vital that multinational companies pay their taxes where they generate profits," Mr Moscovici said, adding that a draft directive on the taxation of multinationals was now with the EU's council of ministers.

The European Parliament estimates that multinationals' tax avoidance costs European Union countries some 70 billion euros (S$107.67 billion) per year in lost revenues.

The current Dutch presidency of the EU has put tax issues at the top of its economic agenda.

REUTERS