THE UK is set to eschew EU plans to tackle tax avoidance practices by multinational companies.
Brussels is keen to introduce certain common tax harmonisation rules which would go some way to eliminating the temptation for companies to divert profits through low-tax jurisdictions such as Luxembourg.
The common consolidated corporate tax base (CCCTB) would see countries adopt a common set of rules on where company profits arise; removing many of the national differences that multinationals have been able to exploit to lower their tax bill.
However, financial secretary to the Treasury David Gauke (pictured) told representatives from the European parliament that Britain would not adopt the measures.
“He was very clear that the UK is insisting on tax competition,” German MEP Michael Theurer told the Guardian. “It was really a shock from the minister.”
Some EU member states have been staunchly against the proposals since 2011, and as such, European commissioner for tax Pierre Moscovici – who is leading the plan’s resurrection – has been prepared to water down elements of the CCCTB in an effort to gain those states’ acquiescence, including the UK’s.
Those efforts, though, appear to be in vain as Gauke reiterated Britain’s stance.
Alongside the government’s inroads against tax avoidance, chancellor George Osborne has put great emphasis on creating an attractive tax environment for inward investment, slashing the headline corporate tax rate from 28% to 20% alongside making various tax reliefs available.
Adopting the CCCTB in its current form would be incompatible with that strategy.
The Treasury declined to comment on the UK’s motives for rejecting the CCCTB, but said in a statement: “Direct taxation is a matter for EU countries, and any direct taxation matters require unanimity across all EU countries. We’re fully involved in international discussions on tax issues and have consistently supported global measures, through the EU, G20 and OECD, which will strengthen international rules to prevent corporate tax avoidance.”