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EU tax investigations: the net is spread wider but to what end?

EU tax investigations: the net is spread wider but to what end?
Global
19 Jan 2015

We understand that the European Parliament is set to launch a full investigation into claims that countries within the EU have collaborated with multinational companies and provided so called ‘sweetheart’ tax deals. 

This inquiry into alleged state-facilitated tax avoidance is the latest in a string of on-going probes into corporate tax affairs at an EU level, with the alleged provision of state aid to multinationals by Ireland, the Netherlands and Luxembourg hitting newspaper headlines in November last year.
 
Following a number of years where aggressive scrutiny and knee jerk investigations have focused on multinationals, who are simply operating within countries’ legal framework, it is right that the political agenda moves on to concentrate on the role and actions of countries themselves. Governments have created the modern day international tax environment, acting through the OECD, and businesses have followed this structure and adapted business models to conform to it, in a tax-efficient and legal manner. 
 
It should come as no surprise that in the drive for investment, jobs, and growth, governments across the world have courted multinationals with an array of incentives. This is clearly not an issue that affects the handful of countries mentioned in the media, but extends much wider – as the investigation looks set to reveal. 
 
The BEPS action plan is currently bringing about the most significant change to the global tax system seen in decades. While there are still questions surrounding the implementation of BEPS and its time-frame, it is doing more to address the problems of our antiquated tax structure than anything else we have seen from the EU, which appears to be picking fights at both company and country level without due consideration.   

Keith O’Donnell, Taxand Luxembourg.


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Taxand's Take

The problems we see in the international tax system cannot be fixed by one or two EU countries alone, like they cannot be fixed by the multinationals, but we are clearly seeing a tightening of the screw, as action is demanded following public pressure.

Taxand's Take Author

Keith O'Donnell
Taxand Board member & Taxand global real estate tax service line leader
Luxembourg

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