The European Commission applauded new rules approved at a recent Economic and Financial Affairs Council (ECOFIN) meeting that will make it easier for the European Union (EU) to prevent tax avoidance by multinational companies.
"Today is yet another success story in
our campaign for fairer taxation," Commissioner for Economic and
Financial Affairs, Taxation and Customs Pierre Moscovici
said , according to a
release from the European Commission. "Step by step, we are eliminating the channels used
by certain companies to escape taxation. I congratulate the Member States for
agreeing on this tangible measure to clamp down on tax abuse and install a
fairer tax environment in the EU."
The new regulation, which builds upon the
Anti-Tax Avoidance Directive (ATAD), will help prevent multinational companies
from using the discrepancies between the tax systems of member states and
non-EU countries to their advantage. These situations, called hybrid
mismatches, result in some incomes and entities being taxed differently in
different countries, allowing some companies to avoid all taxation.
The new rules, which will go into effect
on Jan. 1, 2020, will prevent these hybrid mismatches from being exploited in
the EU, including in cases that involve countries that are not member states.
The provisions were speedily approved, with the recent agreement coming not
quite four months after their initial proposal by the EC.
European Commission applauds adoption of rules to prevent hybrid mismatch exploitation
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