EU working on rules to prevent multinationals from using tax loopholes

EU working on rules to prevent multinationals from using tax loopholesEuropean Union finance ministers have agreed new rules preventing multinational companies from exploiting differences in tax rates between countries in the 28-country EU and those outside the bloc, AP reported on Tuesday.

Ministers backed the new measures at a meeting in Brussels. The rules will target various practices whereby large corporations can take advantage of loopholes between the tax systems of EU member states and non-EU countries in order to reduce their tax liability.

Tuesday's move is the latest effort by the EU to clamp down on tax avoidance by big companies — disparities within the EU were covered by an anti-tax avoidance directive last summer.

"The EU is at the forefront of the fight against tax avoidance," said Maltese Finance Minister Edward Scicluna, whose country currently holds the six-month rotating EU presidency.

According to the terms of the agreement, EU member states will have until the end of 2019 to legislate the changes into national law. By then, Britain will be out of the EU, should the government's exit timetable go to plan.

The agreement was welcomed by one of the main groups in the European Parliament.

"These types of arrangements are widespread and result in a substantial erosion of the taxable basis of corporate taxpayers in the EU. Therefore, it is of utmost importance to lay down rules against this kind of tax avoidance," said Olle Ludvigsson, a spokesman for the Socialists & Democrats.
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