April 24, 2005

EU tax harmonisation continues

A follow on about the Marks and Spencer tax case going through the ECJ, and the EU's attempt to start tax harmonisation by stealth. This if from a most unlikely source, the Independent (dead tree edition on Saturday) which normally has a pro-EU editorial line.
Cadbury is bringing a test case against the Government over the way UK tax laws prevent multinational companies exploiting the different rates of business tax charged across the European Union.

Currently, the Inland Revenue does not allow multinationals to channel profits through subsidiaries in other EU countries where tax rates are lower.
So this is not the same as the Marks case, in fact it is it's flip side. In the marks case they where trying move losses around so that the total profit to be taxed would be lower. In this case they are moving profits around to wherever the tax rate is most favorable so as to pay the least tax.

Like the Marks and Spencer case we can expect this one to be ruled in favour of Cadbury Schweppes, and another step towards tax harmonisation taken.


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