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EC set to investigate tax 'side-stepping' scheme.

THE European Commission is to investigate a scheme introduced by the British Government that can help multinationals drive down their tax bill.

Margrethe Vestager, the EU's Competition Commissioner, said the probe will focus on whether the setup allows multinationals to sidestep EU state aid rules.

She said: "All companies must pay their fair share of tax. Anti-tax avoidance rules play an important role to achieve this goal. But rules targeting tax avoidance cannot go against their purpose and treat some companies better than others.

"This is why we will carefully look at an exemption to the UK's anti-tax avoidance rules for certain transactions by multinationals, to make sure it does not breach EU state aid rules."

The rule, which was introduced by former chancellor George Osborne and came into force in 2013, exempts multinationals from anti-tax avoidance measures and allows them to shift a portion of their taxable income to an offshore corporation, or "controlled foreign company".

HMRC revealed on Wednesday that "tax under consideration" could have been as high as PS5.8bn last year as concerns mount that multinationals are moving profits abroad. The Commission is concerned that the scheme may harm domestic firms by handing an advantage to global rivals based in the UK.

The crackdown comes after the EU Commission announced earlier this year that it was taking Ireland to the European Court of Justice for failing to recover [euro]13bn (PS11.5bn) in tax

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Title Annotation:Business
Publication:The Journal (Newcastle, England)
Date:Oct 27, 2017
Words:238
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