MEPs vote to remove the loopholes used by companies for double tax deduction

28 March 2017 by Sarajuddin Isar

Members of European Parliament (MEPs) Economic and Monetary Affairs Committee (ECON) have voted amendments to the EU’s anti-tax avoidance directive, to remove loopholes allowing multinationals to avoid paying tax on profits by exploiting differences in tax systems between countries.

These loopholes refer to using a lack of coordination between national tax authorities allowing companies established in at least two jurisdictions to have the same expenditure deducted in both jurisdictions. Or to have a payment recognised as tax deductible in one jurisdiction but not recognised as taxable income in the other.

Olle Ludvigsson, ECON member (Group of the Progressive Alliance of Socialists and Democrats in the European Parliament), said: “These arrangements are frequently used by the largest companies with the sole purpose of reducing corporate taxation. We have seen it in both the Apple case and in the McDonald’s case. It is about time that these corporations pay their fair share of taxes.”

The report is now subject to the Council of the European Union consideration.