{"id":128056,"date":"2021-06-08T16:42:14","date_gmt":"2021-06-08T16:42:14","guid":{"rendered":"https:\/\/precoinnews.com\/?p=128056"},"modified":"2021-06-08T16:42:14","modified_gmt":"2021-06-08T16:42:14","slug":"analysis-big-countries-tax-deal-to-reveal-rift-in-europe","status":"publish","type":"post","link":"https:\/\/precoinnews.com\/business\/analysis-big-countries-tax-deal-to-reveal-rift-in-europe\/","title":{"rendered":"Analysis: Big countries' tax deal to reveal rift in Europe"},"content":{"rendered":"

BRUSSELS (Reuters) – A global deal on corporate tax looks set to bring to a climax a deep-seated European Union battle, pitting large members Germany, France and Italy against Ireland, Luxembourg and the Netherlands.<\/p>

FILE PHOTO: Britain’s Chancellor of the Exchequer Rishi Sunak speaks at a meeting of finance ministers from across the G7 nations ahead of the G7 leaders’ summit, at Lancaster House in London, Britain June 4, 2021. Stefan Rousseau\/PA Wire\/Pool via REUTERS\/\/File Photo<\/figcaption>

Although the smaller EU partners at the centre of a years-long struggle over their favourable tax regimes, welcomed the Group of Seven deal on June 5. for a minimum corporate rate of at least 15%, some critics predict trouble implementing it.<\/p>\n

The European Commission, the EU\u2019s executive, has long struggled to get agreement within the bloc on a common approach to taxation, a freedom which has been jealously guarded by all its 27 members, both large and small.<\/p>\n

\u201cThe traditional EU tax holdouts are trying to keep the framework as flexible as possible so that they can continue to do business more or less as usual,\u201d Rebecca Christie of Brussels-based think tank Bruegel said.<\/p>\n

Paschal Donohoe, Ireland\u2019s finance minister and president of the Eurogroup of his euro zone peers, gave the G7 wealthy countries\u2019 deal, which needs to be approved by a much wider group, a lukewarm welcome.<\/p>\n

\u201cAny agreement will have to meet the needs of small and large countries,\u201d he said on Twitter, pointing to the \u201c139 countries\u201d needed for a wider international accord.<\/p>\n

And Hans Vijlbrief, deputy finance minister in the Netherlands, said on Twitter that his country supported the G7 plans and had already taken steps to stop tax avoidance.<\/p>\n

Although EU officials have privately criticised countries such as Ireland or Cyprus, tackling them in public is politically charged and the bloc\u2019s blacklist of \u2018uncooperative\u2019 tax centres, due to its criteria, makes no mention of EU havens.<\/p>\n

These have flourished by offering companies lower rates through so-called letter-box centres, where they can book profits without having a significant presence.<\/p>\n

\u201cEuropean tax havens have no interest in giving in,\u201d Sven Giegold, a Green-party member of the European Parliament lobbying for fairer rules, said of the prospects for change.<\/p>\n

Nevertheless, Luxembourg\u2019s finance minister Pierre Gramegna welcomed the G7 accord, adding that he would contribute to a wider discussion for a detailed international agreement.<\/p>

Slideshow ( 2 images )<\/span><\/figcaption>

Although Ireland, Luxembourg and the Netherlands welcomed the long-fought for reform, Cyprus had a more guarded response.<\/p>\n

\u201cThe small EU member states\u2019 should be acknowledged and taken into consideration,\u201d Cyprus\u2019s Finance Minister Constantinos Petrides told Reuters.<\/p>\n

And even G7 member France may find it hard to completely adjust to the new international rules.<\/p>\n

\u201cBig countries like France and Italy also have tax strategies they are determined to keep,\u201d Christie said.<\/p>\n

The Tax Justice Network ranks the Netherlands, Luxembourg, Ireland and Cyprus among the most prominent global havens, but also includes France, Spain and Germany on its list.<\/p>\n

FAIRNESS AND FINANCE<\/h2>\n

Europe\u2019s divisions flared up in 2015 after documents dubbed the \u2018LuxLeaks\u2019 showed how Luxembourg helped companies channel profits while paying little or no tax.<\/p>\n

That prompted a clampdown by Margrethe Vestager, the EU\u2019s powerful antitrust chief, who employed rules that prevent illegal state support for companies, arguing that such tax deals amounted to unfair subsidies.<\/p>\n

Vestager has opened investigations into Finnish paper packaging company Huhtamaki for back taxes to Luxembourg and investigating the Dutch tax treatment of InterIKEA and Nike.<\/p>\n

The Netherlands and Luxembourg have denied the arrangements breach EU rules.<\/p>\n

But she has had setbacks such as last year when the General Court threw out her order for iPhone maker Apple to pay 13 billion euros ($16 billion) in Irish back taxes, a ruling which is now being appealed.<\/p>\n

Vestager\u2019s order for Starbucks to pay millions in Dutch back taxes was also rejected.<\/p>\n

Despite these defeats, judges have agreed with her approach.<\/p>\n

\u201cFair taxation is a top priority for the EU,\u201d a spokesperson for the European Commission said: \u201cWe remain committed to ensuring that all businesses … pay their fair share of tax.\u201d<\/p>\n

The Netherlands in particular has underscored a willingness to change after criticism of its role as a conduit for multinationals to move profits from one subsidiary to another while paying no or low taxes.<\/p>\n

It introduced a rule in January taxing royalties and interest payments sent by Dutch companies to jurisdictions where the corporate tax rate is less than 9%.<\/p>\n

\u201cThe demand for fairness has grown,\u201d said Paul Tang, a Dutch member of the European Parliament. \u201cAnd now it is combined with a need to finance investment.\u201d<\/p>\n

($1 = 0.8214 euros)<\/p>\n

Source: Read Full Article<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

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