EU: Fairer corporate taxation reform

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The European Commission will initiate changes to the way taxes on sales are levied in the EU. This is with the objective of combatting fraud and restricting firms’ excessive tax-planning.

The new plan is part of a wider EU campaign for fairer corporate taxation. This is due to the fact that many businesses exploit loopholes in the EU’s single market in order to establish that they pay little or no tax in Europe.

And so, the objective could potentially end any tax advantages for suppliers that serve in the EU market from a low-tax country, such as U.S. online retailer Amazon, which is based in Luxembourg.

The plan is to minimise billions of euros of tax revenues that are lost to some of the EU states every year. The amendments are also likely to remove the motivation for exporters to base their operations in countries with low VAT rates.

The EU’s executive Commission have presented the idea that Value-Added Tax (VAT) in a cross-border trade will be charged at a rate set by the country where the buyer is, instead of the seller’s country, as detailed in a draft document of the changes.