The European Commission is to investigate a UK scheme that exempts certain transactions by multinational groups from the application of tax-avoidance rules.
Image: Olivier Le Moal / Shutterstock
A probe into a UK scheme that exempts certain transactions by multinational groups from the application of UK rules, which target tax avoidance, has been launched by the European Commission.
The investigation aims to assess whether exceptions to the UK's Controlled Foreign Company (CFC) rules—which stop UK companies using a subsidiary, based in a low or no tax jurisdiction, to avoid tax in the UK—breach EU State aid rules by allowing multinationals to pay less UK tax.
The UK's CFC rules allow HMRC to reallocate all profits artificially shifted to an offshore subsidiary back to the UK parent company, where it can be taxed accordingly
For thoughtful journalism, expert insights on corporate governance and an extensive library of reports, guides and tools to help boards and directors navigate the complexities of their roles, subscribe to Board Agenda