Economy

European Union probes British scheme shielding multinationals from tax avoidance rules

Announcing the in-depth investigation, Ms Vestager warned "rules targeting tax avoidance can not go against their objective and treat some companies better than others".

He said the investigation was part of an agreed strategy to ensure "all companies, whether they are big or small, pay their fair share of tax where their profits are earned".

European Competition Commissioner Margrethe Vestager holds a news conference at the EU Commission's headquarters in Brussels, Belgium October 4, 2017.

European Commissioner Margrethe Vestager said the inquiry would investigate whether the United Kingdom scheme allowed some multinationals to pay less tax than other companies in breach of EU rules.

"In particular, EU competition law, including EU State aid rules, continue to apply in full to the United Kingdom and in the United Kingdom until it is no longer a member of the EU", the commission said in a statement.

The crackdown comes after the EU Commission announced earlier this year that it was taking Ireland to the European Court of Justice for failing to recover 13 billion euros (£11.5 billion) in tax from United States tech giant Apple.

The European Commission today launched an investigation into whether a British scheme shielding multinational companies from tax avoidance rule breaks EU competition law.

Launching the inquiry, the European Commission said such financing income was often used as "a channel for profit-shifting" by multinationals.

A spokesman for Britain's Treasury said its rules prevented profits from being artificially diverted overseas to avoid tax and defended the financing exception, introduced by former finance minister George Osborne.

France has a led a major push in the European Union to increase taxes on mega tech firms such as Google and Facebook, but met with resistance at a summit last week from the likes of Ireland and Luxembourg, which have become major centres for big tech firms.

It also handed Amazon a bill of around 250 million euros (£221 million) in back taxes after stating that the firm's sweetheart tax deal with Luxembourg broke state aid rules.

Ms Vestager has been involved in bringing a number of high-profile cases targeting the tax benefits granted to some companies, including ordering Ireland to recover up to 13 billion euros (£11.6 billion) in unpaid taxes from Apple.



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