10th June 2016

EP votes on anti-tax avoidance directive

On 8 June, the European Parliament adopted its position on the draft directive on rules against tax-avoidance. Tax directives are adopted by the Council unanimously, the EP is only consulted. The EP´s position is thus not binding. The directive targets the most commonly used practices of tax avoidance, such as transfer pricing, or changing jurisdictions of establishment. It is based on the G20 and OECD standards and the underlying principle is, that tax should be paid where the profit is made. New rules, once adopted by the Council and then transposed, would impose additional tax duties on companies attempting to shift profits, or change jurisdiction of establishment. It also introduces a widely defined anti-abuse clause – if a company attempts to shift profits through an existing loophole in legislation into a lower-tax jurisdiction, the member states will be able to declare such practices illegal. MEPs, with Czech Ludek Niedermayer being EPP Shadow Rapporteur of the file, proposed to strengthen some of the rules even further, asked for rules banning letterbox companies, or called on the Commission to come up with a Common Consolidated Corporate Tax Base (CCCTB) legislative proposal.

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Members of the American Chamber of Commerce in the Czech Republic