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Article

18 Nov 2012

Author:
James Shotter & Vanessa Houlder, Financial Times

Europe plans action on corporate tax avoidance

Pressure is mounting on companies which artificially shift profits to tax havens or low-tax jurisdictions...[The EU] Commission is recommending that member states adopt a common, tougher definition of what constitutes a tax haven, and then scrap or suspend existing double taxation agreements with such countries, meaning that companies would no longer be able to use them to avoid taxes...The Commission is also recommending two further steps intended to make it harder for companies to arbitrage the gaps between different tax codes...However, tackling profit-shifting is complex because...subsidiaries in low-tax European countries cannot be treated as tax avoidance if they carry out genuine economic activities. [refers to Google, Cadbury Schweppes (now Cadbury & part of Kraft Foods)]