EU IMPOSES 15% TAX ON MULTINATIONAL FIRMS WITH TURNOVER OF MORE THAN $916 MILLION

Thu 23 December 2021:

As part of a pact reached by 136 countries, the European Union (EU) has imposed a 15% tax rate on multinational corporations.

The tax will be imposed on multinational enterprises with an annual turnover of more than $916 million in two consecutive years that are members of the bloc.

According to EU economy commissioner Paolo Gentiloni, the rule aims at “tightening the screws on shell companies or letterbox companies, used as vehicles for tax avoidance or evasion.”

It looks at a company’s passive income, if most of its transactions are cross-border, and whether its management and administration are outsourced.

According to the Oxfam charity organisation, many of the world’s tax havens are not on the EU’s list of non-cooperative states, allowing them to dodge investigation.

“Transparency for only the 27 EU member states and the 21 currently blacklisted or greylisted jurisdictions means keeping corporate secrecy for over three out of four of the world’s nearly 200 countries,” the Oxfam charity group said.

“EU legislators have granted multinational corporations plenty of opportunities to continue dodging taxes in secrecy by shifting their profits to tax havens outside the EU, like Bermuda, the Cayman Islands, and Switzerland,” Oxfam’s tax expert Chiara  Putaturo said.

EU badly needs cash to finance an economic recovery after the coronavirus pandemic.

“The directive we are putting forward will ensure that the new 15 percent minimum effective tax rate for large companies will be applied in a way that is fully compatible with EU law,” Gentiloni said.

“These tax transparency measures will help to ensure that multinational companies pay their fair share and can bring some fairness to how they operate,” said Greens MEP Ernest Urtasun of the parliament’s economic and monetary affairs committee.

SOURCE: INDEPENDENT PRESS AND NEWS AGENCIES

Photo: President of the European Commission Ursula von der Leyen;

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