EU plans clampdown on pro-corporate tax systems to aid recovery

The European Commission on Wednesday unveiled plans to clamp down on tax regimes seen as unduly beneficial to big corporations in a move it said would aid Europe’s recovery from the COVID-19 pandemic.

European Union countries are seeking to shore up public revenues to fund economic recovery at a time of mounting public anger over tax avoidance by corporations – in particular, multinational digital giants – and wealthy individuals.

The Commission – the EU‘s executive – said it would expand its tax code of conduct to tackle member states’ corporate tax regimes that have broadly harmful effects.

The 1997 code is the EU‘s tool for blacklisting jurisdictions where tax avoidance or evasion is prevalent but currently it can only address regimes that are deemed preferential: for example, if a country has one tax rate for domestic firms and a different rate for international companies.

Previous plans to change EU tax rules have been thwarted by member states’ veto powers, which mean it takes only one country to block proposed tax reforms.

via -Reuters