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Swedish tax authorities find ways to control tax management carried out by big companies

Wednesday, 11 January 2012
Laws enacted by the Swedish state which would supposed to stop large companies from the manipulating the state on tax issues has been determined as not effective. The so called advanced tax planning system is continuing at full scale, reports Swedish business daily, Dagens Industri.

Swedish big corporations have long operated in a system that allowed the means to pay each other money, so that interest rates may be offset against their taxes according to Dagens Industry.

Already in 2009 the government introduced new rules to curb tax planning, which meant that Sweden could reduce some lose big tax looses on profits arising in the country.
But a new survey from the Swedish tax authority which the paper has extracted some vital points from note that the so-called interest-spinning hands is spinning forward the same planning mechanism at full speed.


A popular approach operating right now is that which let a Swedish company to borrow from another group of companies registered in Cyprus. The interest rate on the loan becomes a tax deduction, and the Cyprus Company pays a 10 percent tax on revenue.

10 percent is the tax limit of approved inter-interest deduction. Now the Swedish tax authority wants to change the Tax Act so that it stops that line of obvious tax planning.
According to the Tax calculations, it is about Skr5 billion that the Swedish treasury looses as a results of such planning.

The question now is whether the rules will be changed such that companies don’t borrow from each other or that the tax authorities will provide the necessary funding companies need. Also it is not clear whether the rule will limit companies from borrowing from abroad or trying to force companies to get stuck wit the expensive and arrogant Swedish banks.

What ever the tax authority is palling to so observers caution the bank not to scare away companies from Sweden with a ridiculous tax laws.
By Team

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