Wednesday 21 October 2015

Commission acts against tax régime shopping

The Financial Times and the Independent report that the European Commission is expected to rule shortly on "sweetheart" tax deals between multi-national companies and the administrations of the Netherlands and Luxembourg. Fiat and Starbucks are the immediate targets of information commissioner Margrethe Vestager, but if her rulings stick then Amazon and Apple are likely to find themselves in the line of fire. Likewise, if Luxembourg and the Netherlands are ordered to bring their corporate tax régimes more into line with the European Union norm, then other governments which cosset particular businesses will come under scrutiny. The Irish finance minister is already geared up for a fight over the Republic's favourable treatment of Apple.

We should hope for a successful outcome for Ms Vestager. For one thing, it will remove the incentive for a race to the bottom which our chancellor George Osborne has felt obliged to join in. If we no longer have to compete with Ireland and Luxembourg for company head offices on the basis of taxation, it will give a boost to our national income. Citizens of our fellow-EU members will feel an immediate benefit as multi-nationals are forced to fork out back taxes. The figures may be in the high millions for each treasury, rather than the billions anticipated by the Indy, but the rebate is still well worth having and the principle even more so.

Later: confirmation of the Commission's ruling against the sweetheart deals.

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