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EU states back plan to expose big companies’ tax avoidance | European Union


The EU has moved to force multinational companies to publish a breakdown of the tax they pay in each of the bloc’s member states and in tax havens such as Seychelles, piling pressure on the UK government to follow suit.

Country-by-country reporting is designed to shine a light on how some of the world’s biggest companies – such as Apple, Facebook and Google – avoid paying an estimated $500bn (£358bn) a year in taxes by shifting their profits from higher-tax countries such as the UK, France and Germany to zero-tax or low-tax jurisdictions including Ireland, Luxembourg and Malta.

A majority of EU countries backed legislation at a meeting of ministers on Thursday, in what campaigners said was a “landmark” moment, five years after the regulation was first proposed.

Negotiations will now open with the European parliament, which wants to broaden the scope of the regulation. MEPs want multinationals to make public their profits and tax paid in any country, rather than just member states or a blacklist of EU tax havens, as the price for operating in the bloc.

The decision by the member states to move forward with the proposal, first tabled by the European commission after the 2014 LuxLeaks scandal exposed the sweetheart deals being offered by Luxembourg, was celebrated by senior MEPs who have campaigned for reform.

Sven Giegold, the financial and economic policy spokesperson of the Greens group in the European parliament, said he hoped the move would put pressure on the UK to follow suit.

The chancellor, Rishi Sunak, can exercise powers under the Finance Act 2016 to make multinationals’ country-by-country reporting data public in the UK but the government has said it will only do so if there is an international agreement on the issue.

“This is the breakthrough for fair corporate taxation everywhere in Europe,” Giegold said. “Public country-by-country reporting is a minimum transparency requirement for companies with maximum effect for the common good.

“If large companies have to disclose their profits and taxes paid per country, tax trickery is hardly possible any more. This is a strong barrier against tax avoidance.

“This is a real test case for the new EU-UK cooperation agreement, where both sides agreed to work together on tax matters. It would be a very positive sign for future cooperation if the UK will join the EU in this bold step towards greater corporate tax transparency.”

The backing given to the measure by a qualified majority of member states follows years of disappointment for tax activists. At a meeting of ministers on Thursday, Germany, Ireland, Luxembourg, Malta, Sweden, Czech Republic, Hungary and Cyprus had again sought to block the proposal by voting against it or abstaining.

A breakthrough was achieved, however, when Slovenia and Austria joined Finland, Greece, Denmark, Estonia, Romania, Poland, Netherlands, Italy, Spain, France, Bulgaria and Belgium in supporting it.

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“I am happy to say that we got great support today, by a large majority of member states,” Portugal’s minister of economy and digital transition, Pedro Siza Vieira, said after the meeting. “We still have a few steps to take in the legislative process, but we can take these steps quickly.”

Oxfam hailed the agreement, describing it as “an important first step towards greater corporate tax transparency”.

Concerns remain, however, over a six-year reporting exemption for “commercially sensitive information” in the proposal backed by the member states. The regulation will also apply only to companies with an annual consolidated turnover above €750m (£650m), excluding nine in 10 multinationals, Oxfam said.


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