EU closed a loophole in the tax system

  • 6/23/14 3:27 PM

The European Union has closed a loophole in the tax system that would allow multinational companies to reduce their tax bills by using the differences in national tax rules. This is stated in the statement of EU finance ministers.
"The goal is to close a loophole in the law that allowed corporations to use the discrepancy between national tax rules so as to avoid paying taxes on certain types of income," - said in a statement the EU finance ministers.
Change in the EU directive on the parent and subsidiary companies concerned with "hybrid loan agreements." The combination of equity and debt is often used as a tool for tax planning.
Some EU member states qualify profits from such a tool as subject to tax, but some - not. This loophole has prompted many corporations to open subsidiaries in countries where this type of income is not taxable.
"With the EU Directive, which was based on common sense – to avoid double taxation, some crafty company managed to avoid taxes altogether - said French Minister of Finnance Michel Sapin. - Now we can expect a little more money into the state treasury, which, as you know, we are very interested. "
 
Source: The Economichna Pravda

 

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