The European Banking Federation notes with interest the proposals tabled by the European Commission to bring corporate tax rules in the EU into line with global agreements in order to discourage multinational companies from shifting their profits to off-shore low-tax jurisdictions.
The two proposed EU directives seek to align EU tax rules with the Base Erosion and Profit Shifting (BEPS) Action Plan1 adopted last year by the Organization for Economic Cooperation and Development (OECD) and G20 countries.
The EU proposals lay down new corporate tax rules addressing for example interest deductibility, hybrid mismatches, controlled foreign companies and exit taxation, and contain mandatory requirements for Member States to automatically exchange information on country-by-country reporting with other Member States.
Whilst recognising the objectives of the BEPS project, the EBF is concerned that the proposed EU measures may lead to increased administrative burdens and additional compliance costs for all multinational clients. Furthermore the EBF calls on the EU to properly consider specific banking activities which need to be excluded from the limitation on interest deductibility.