European leaders take on corporate tax avoidance

From left, Dutch Prime Minister Mark Rutte, Latvian Prime Minister Valdis Dombrovskis and British Prime Minister David Cameron chat during a European Council summit in Brussels.
(Olivier Hoslet / EPA)

LONDON -- European leaders gathered in Brussels on Wednesday to discuss how to clamp down on multinational companies that exploit loopholes or set up complex accounting schemes to lower their tax bills.

Taking on an issue that has also become prominent in the United States, countries such as Britain, France and Germany are pushing for the European Union’s 27 member states to share financial information and take other collective action to curb corporate tax avoidance.

In recent months, Google, Amazon and Starbucks, among other companies, have been the targets of criticism in Europe for allegedly trying to pay as little tax as possible. This week, Apple executives were called in to testify before a congressional panel in the U.S. over their corporate tax strategy.


“I believe in low taxes for businesses because we’ve got to encourage investors, we’ve got to encourage jobs,” British Prime Minister David Cameron said. “But we’ve got to make sure, as we set those tax rates, that companies pay taxes, and that means international collaboration, sharing of tax information.”

Cameron has also pledged to make a crackdown on tax avoidance a top priority when he chairs next month’s Group of 8 meeting in Northern Ireland.

Whether big multinational companies are paying as much tax as they should has become a hot-button question in Europe, where many countries have imposed painful austerity cuts.

In November, France slapped Amazon with a bill for more than $250 million in back taxes, interest payments and penalties that it said the online retailer dodged by moving profits around its branch offices in Europe. Booking revenue or signing contracts in nations with low corporate levies, such as Ireland, even if the actual business is to be conducted in another country, has been a popular method for companies to shrink their tax bills.

Amazon said it would contest the French government’s claim.


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