The proposal from the European Commission is expected to close loopholes in the Parent-Subsidiary Directive, which some companies have been using to escape taxation, according to a press release of the Commission.

　　"In particular, companies will no longer be able to exploit differences in the way intra-group payments are taxed across the EU to avoid paying any tax at all," said the press release.

　　The Directive was designed to eliminate tax obstacles for profit distributions between parent companies and subsidiaries based in different Member States. It gives a tax exemption for dividends and other profit distributions paid by subsidiary companies to their parent companies.

　　The revision of the Parent-Subsidiary proposal, together with the Recommendation on Aggressive Tax Planning, for the first time ever, took concrete measures to tackle the widespread problem of corporate tax avoidance, said the EU.

　　Under the new proposal, the Directive is tightened up so that specific tax planning arrangements, such as hybrid loan arrangements, cannot benefit from tax exemptions.