EU Commission moves to close corporate tax loophole used by Google, Amazon and Starbucks

 

Brussels

The European Commission has announced plans to close a loophole which has allowed large corporations to pay tax in countries with lower rates, even if they only own one letterbox there.

As part of efforts to get companies to pay a fair share of tax in the countries where they make most of their profits, Algirdas Semeta, the EU’s Taxation Commissioner, proposed amending the bloc’s corporate tax legislation to introduce an anti-abuse clause for countries trying to shift money to a subsidiary abroad to cut their tax bills. While tax evasion is illegal, what is known as “ aggressive tax planning” is widely used by firms including Google, Amazon, Starbucks and Apple.

This can include multinationals parking profits in a country with a more favourable tax climate such as Luxembourg or The Netherlands, which can be done if there is merely one employee or a letterbox.

Such practices are legal, but have provoked public anger as ordinary people see their tax bills rise and their quality of life fall. Apple came under fire in May when it emerged they had paid just 2 per cent tax on $74 billion £62 billion) of earnings over four years using loopholes in Ireland.

Mr Semeta cited a survey which found 90 per cent of EU citizens wanted to see big firms taxed fairly. “With [this] proposal, we will ensure that the spirit, as well as letter, of our law is respected,” he said. “The result should be fairer revenues for national budgets, fairer competition for businesses and fairer taxation across Europe.”

But while many European citizens may want companies to pay their fair share, the European Commission still has to convince the 28 EU member states to agree to the laws. Many smaller countries with low-tax regimes will be unwilling to sign up to legislation which may impact much-needed foreign investment.

At a summit in May, EU heads of states pledged to do more to crack down on individuals and businesses trying to escape heavy tax bills.

Suggested Topics
Start your day with The Independent, sign up for daily news emails
News
ebooksAn unforgettable anthology of contemporary reportage
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Recruitment Genius: Warehouse Operative / Forklift Driver

£14000 - £17000 per annum: Recruitment Genius: Through a combination of excell...

Recruitment Genius: Warehouse Manager

£25000 - £30000 per annum: Recruitment Genius: This company are looking for a ...

Recruitment Genius: Service Plan Champion

Negotiable: Recruitment Genius: A vacancy has arisen for a Service Plan Champi...

Recruitment Genius: Service Plan Champion

Negotiable: Recruitment Genius: A vacancy has arisen for a Service Plan Champi...

Day In a Page

Sepp Blatter resignation: The beginning of Fifa's long road to reform?

Does Blatter's departure mean Fifa will automatically clean up its act?

Don't bet on it, says Tom Peck
Charles Kennedy: The baby of the House who grew into a Lib Dem giant

The baby of the House who grew into a Lib Dem giant

Charles Kennedy was consistently a man of the centre-left, dedicated to social justice, but was also a champion of liberty and an opponent of the nanny-state, says Baroness Williams
Syria civil war: The harrowing testament of a five-year-old victim of this endless conflict

The harrowing testament of a five-year-old victim of Syria's endless civil war

Sahar Qanbar lost her mother and brother as civilians and government soldiers fought side by side after being surrounded by brutal Islamist fighters. Robert Fisk visited her
The future of songwriting: How streaming is changing everything we know about making music

The future of songwriting

How streaming is changing everything we know about making music
William Shemin and Henry Johnson: Jewish and black soldiers receive World War I Medal of Honor amid claims of discrimination

Recognition at long last

Jewish and black soldiers who fought in WWI finally receive medals after claims of discrimination
Beating obesity: The new pacemaker which helps over-eaters

Beating obesity

The new pacemaker which helps over-eaters
9 best women's festival waterproofs

Ready for rain: 9 best women's festival waterproofs

These are the macs to keep your denim dry and your hair frizz-free(ish)
Cycling World Hour Record: Nervous Sir Bradley Wiggins ready for pain as he prepares to go distance

Wiggins worried

Nervous Sir Bradley ready for pain as he prepares to attempt cycling's World Hour Record
Liverpool close in on Milner signing

Liverpool close in on Milner signing

Reds baulk at Christian Benteke £32.5m release clause
On your feet! Spending at least two hours a day standing reduces the risk of heart attacks, cancer and diabetes, according to new research

On your feet!

Spending half the day standing 'reduces risk of heart attacks and cancer'
With scores of surgeries closing, what hope is there for the David Cameron's promise of 5,000 more GPs and a 24/7 NHS?

The big NHS question

Why are there so few new GPs when so many want to study medicine?
Big knickers are back: Thongs ain't what they used to be

Thongs ain't what they used to be

Big knickers are back
Thurston Moore interview

Thurston Moore interview

On living in London, Sonic Youth and musical memoirs
In full bloom

In full bloom

Floral print womenswear
From leading man to Elephant Man, Bradley Cooper is terrific

From leading man to Elephant Man

Bradley Cooper is terrific