Having companies pay their tax where they make their profits is the best way to resolve unfair tax competition between member states, Competition Commissioner Margarita Vestager said yesterday.
She was responding to a European Parliament reporting calling for countries to forfeit tax that the Commission say companies should pay when they breach state aid rules.
The Parliament’s report said the current system, whereby companies that had benefited from tax deals and were ordered to pay it to the state involved, means the country benefited twice from breaking state-aid rules.
But Ms Vestager disagreed with this interpretation. “We don’t do punishment— we do embarrassment and we do inconvenience”.
When the Commission says that illegal aid has to be recovered and unpaid taxes have to be paid, it is an effort to restore competitiveness.
“If this discussion is to continue it has a much broader scope than state aid and I hope that we will get into a situation that we will not have to ask companies to re-do tax bills but where profits made in a country are taxed in that country.
“This is a very import debate but we need to move forward and tax paid in the country where profits are made.
“This will be a discussion for the future and not the past”.
The Commissioner, who is currently investigating tax arrangements between the Irish revenue commissioners and Apple, announced she is launching a probe into two steel companies, Ilva in Italy and Duferco in Belgium.
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