The E.U. Tax Clampdown
The European Union has come up with a plan in order to curb deals between the multinational companies and government which are known as sweetheart tax accords. The proposed package that is tailored on tax transparency entails the involvement of European governments in exchanging details concerning tax rulings in order to try and trap “aggressive tax planning”. This plan was in order to have a members’ fiscal policy that will enable the system to a multinational companies and government equilibrium price. Each of the member country which number to 28, have to affirm all of their tax rulings in a consecutive regular period span of three months ...view middle of the document...
Improvement of tax policies especially those tailored to labor laws will have a greater impact on curbing the corporate tax evasion menace. In order for the EU to obtain the harmonization of member state taxes, there is need for tax transparency in order to regulate and monitor the taxation process of the states visa vie the multinational companies involved. The member states are mandated to hand over all the tax rulings that are of cross-border relations to the other member states. This should go beyond the current situation where information sharing is founded on the consideration of relevance by the original state. “Under European Union (EU) rules member states are not allowed to grant companies tax advantages that distort competition.” (BBC) The idea is also pegged on exempting rulings on domestic tax. The member states also have the authority to request for more information that is detailed in case of need without prohibitions. No member country is allowed to refuse to give out any information on the basis of public policy or commercial secrecy.
In the sample below, Tax rate on multinationals labeled series 1, 2 and 3 varied in different countries stated as category 1, 2, 3, and 4 hence the E.U. can reach equilibrium to curb tax evasion by getting the underlying microeconomics principles.
The transparent taxation system has resulted to areas of contention between states and market economies. Moreover, the system of tax burden distribution has usually ignited social conflicts that are always intense. The understanding of the near ability to resist tax, it has emerged obvious...