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EU concerned about wider impact of US reform on global tax rules

about 3 hours ago

The US Senate has approved a tax overhaul that could cut the corporate tax rate from 35% to 20%




European Union finance ministers will discuss on Tuesday a planned reform of taxes in the US that European officials said could affect EU business and global tax rules.

The US Senate approved on Saturday a tax overhaul that could cut the corporate tax rate from 35 per cent to 20 per cent in what would be the largest change to US tax laws since the 1980s.

Recent talks within the EU have instead focused on making sure that firms pay more taxes after multiple disclosures of financial documents caused public outcry against the widespread use of schemes to slash corporations’ tax bills.

After the US move EU finance ministers rushed to add the issue to the agenda of their monthly meeting on Tuesday.

“If these reforms materialise as they stand now, it could create serious difficulties,” a French finance ministry source said.

Of particular concern is an aspect of the reform that would give the US government a broader scope to tax European subsidiaries on goods they sell in the United States, a second source said.

The EU is also concerned about the wider impact of the US reform on global tax rules and even on financial stability. The US move could strengthen the hand of EU states like Luxembourg and Ireland that oppose stricter tax rules, fearing they could make Europe less competitive and weaken economic growth. – Reuters