“EU to investigate UK tax loophole for multinationals”

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Source: theguardian.com 25 October 2017

“The EU is to launch an investigation into a British government scheme that may help multinational firms pay less tax, the Guardian has learned.

Margrethe Vestager, the EU competition commissioner, will announce on Thursday that she is opening an in-depth investigation into a UK tax scheme that exempts multinationals from anti-tax avoidance measures. Officials think the special exemption for multinationals may break EU competition rules by allowing them to pay less tax than domestic-only rivals.

The inquiry centres on a change to the UK’s “controlled foreign company” rules announced by the then chancellor, George Osborne, in 2011. The new rules were described by one expert at the time as a huge change, which meant companies could assume they were exempt from the anti-avoidance rules unless specifically caught.

The rule change, which came into force in 2013, means a multinational company resident in the UK can lower its tax bill by shifting some taxable income to an offshore corporation, known as a “controlled foreign company”. CFCs are offshore subsidiaries that multinationals use to move capital around their global operations.”

Source article here

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