THE ANTI-TAX AVOIDANCE DIRECTIVE AS A MEAN TO TACKLE HARMFUL TAX PRACTICES IN THE EUROPEAN UNION

Abstract

For many years the international community was focused on solving the problem of overlapping the tax
rules of two different jurisdictions. Due to the worldwide network of double tax treaties for prevention of
double taxation and globally developed and accepted distributive rules for allocation of taxing rights,
countries have managed to overcome the consequences of international double taxation of individuals and
legal entities that earn income, capital and/or profit from cross-border activities. However, it seems that
much more difficult problems have appeared on the international tax “scene”. Namely, the process of
globalization has undoubtedly brought number of benefits, mainly for multinational companies. On the
other hand, the possibilities of free transfer of profit through complex organizational structures have
pushed the countries away from their “comfort zone”.
The problem is far more complex within the European Union, where, as a result of the internal market,
multinational corporations can more easily explore the differences in the tax legislation among the
Member States in order to minimize their tax burden. Tax evasion, aggressive tax planning, transfer
pricing and thin capitalization are just some of the issues that require a systematic approach from the EU.
Regarding these current tax challenges, in 2016 the EU Commission adopted the Anti-Tax Avoidance
Directive, as a set of minimum standards and rules that aim at creating and ensuring fair and equal
business environment within the EU.
The EU Member States, but also the countries that continuously strive for membership in the Union (like
Republic of North Macedonia), have implemented a series of unilateral measures in their domestic tax
legislation in order to protect the central budgets from potential tax revenues losses due to the tax base
erosion and profit shifting. The purpose of this paper is to give a legal and tax analysis of the rules
established by the EU Anti-Tax Avoidance Directive and its implementation in the EU Member States up
to date. Also, the author will provide a short overview of the process of harmonization of the Macedonian
tax rules with this important EU Directive.