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European Commission set to tighten up with tax rules

The European Commission (EC) has put forward a proposal for changes to be made to important corporate tax legislation. The aim is to tackle any loopholes in tax avoidance while also integrating a common rule for anti-abuse.

Any vulnerability gaps in the Parent-Subsidiary Directive will be closed should the proposal be approved. The directive was implemented in order to prevent dual-taxation of businesses which are in the same group but reside in separate member states.

The plan is to update the directive’s anti-abuse policy and tighten it up to ensure certain tax planning agreements are unable to take advantage of tax exemptions. The directive is likely to be amended by 2015.

Algirdas Šemeta, the taxation commissioner, said that EU tax policy is heavily focused on creating a better environment for businesses in the EU. He explained:

“This means breaking down tax barriers and tackling cross-border problems such as double taxation. But when our rules are abused to avoid paying any tax at all, then we need to adjust them. Today’s proposal will ensure that the spirit, as well as the letter, of our law is respected.”

The chief executive of the ICAEW also welcomed the change. He said he feels that rules for businesses will be made simpler and clearer and that governments will also find it easier to collect taxes.

Larger businesses need to ensure their accountant – in Prenton, Eastham or anywhere else in the UK – is on the ball with any changes.

Posted by Louise
November 27, 2013

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