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Eurozone Finmin Warns Multinationals to Pay Up On Taxes

September 10, 2016, 9:18 AM UTC
TO GO WITH AN AFP STORY BY CONOR BARRINS A woman walks past Apple's new offices on Half Moon Street in Cork city centre, southern Ireland on October 2, 2014. Perched on top of a hill overlooking the Irish city of Cork, surrounded by a dated industrial estate, Apple's European headquarters is an unlikely base for the world tech giant -- now under growing scrutiny over its local tax arrangements. The company has been in Cork since 1980 but the European Commission's suggestion that its tax deal with Ireland may amount to illegal state aid has drawn new attention on the Irish link for the makers of the iPhone and the iPad. AFP PHOTO / PAUL FAITH (Photo credit should read PAUL FAITH/AFP/Getty Images)
Paul Faith — AFP/Getty Images

Multinationals should refrain from tax avoidance practices and pay their fair share of taxes, the head of Eurozone finance ministers said on Saturday, in a new endorsement to the European Union fight against tax dodging.

In the wake of the ‘Panama Papers’ revelations of widespread tax avoidance practices, Brussels has toughened up its drive for tax fairness by tightening controls and adopting stricter rules. The recent shock multi-billion euro tax demand on Apple was part of that trend.

“My message to those companies is you are fighting the wrong battle. You have to move on. Times are changing,” the head of the eurogroup and Dutch Finance Minister Jeroen Dijsselbloem told reporters on his arrival to a meeting of EU finance ministers in Bratislava, which will discuss tax policies.

“You need to pay your taxes in a fair way. Part of that would be in the U.S., part of that would be in Europe. So get ready to do that,” Dijsselbloem added.

EU Warns Multinationals to Stop Shifting Revenues to Tax Havens

The Commission, which is in charge of protecting market competition in Europe, is investigating multinationals’ tax arrangements in several EU countries to assess whether, by lowering corporations’ tax bills, illegal state aid may have been given.

Online retailer and hamburger group McDonald’s face European Commission’s probes over taxes in Luxembourg, while coffee chain StarbucksCorp has been ordered to pay up to 30 million euros ($33 million) in back-taxes to the Dutch state.

The Netherlands has appealed against the Commission’s decision on Starbucks, and Ireland did the same in the Apple case, fearing that this may undermine the country’s long-established policy of attracting multinationals with low taxes.

Dijsselbloem said the Commission was right in investigating possible illegal state aid, but added that he thinks the Netherlands has the right to ask the EU court whether rules are applied correctly by the European Commission.

Luxembourg Finance Minister Pierre Gramegna also showed scepticism against the Commission’s ruling.

For more on the EU and taxes, watch:

“We are talking about the past, things that happened 5 or 10 years ago, and there are different opinions about the interpretation of the rules,” he told reporters ahead of the meeting.

Tax issues will be the main topic at the finance ministers’ meeting in Bratislava where national delegates will discuss a paper presented by the Slovak presidency of the EU calling for more tax certainty for multinationals.

The proposal aims at stepping up cooperation among EU states to reduce tax avoidance, while making tax bills more predictable for corporations.

The Commission will also brief ministers on plans to set up a common corporate tax base and a single European blacklist for tax havens, in a further effort to counter tax avoidance and make companies pay taxes where they generate profits.

“It is very clear that we can only do this by working together within Europe and beyond Europe to make sure that international corporations pay the right amount of tax in the right place,” British Finance Minister Philip Hammond said arriving to the meeting.