Saturday

18th Nov 2017

EU may impose full tax transparency on US firms

  • Luxembourg was at the centre of a major corporate evasion tax scheme known as LuxLeaks (Photo: Jimmy Reu)

The European Commission is working on forcing big companies to publicly disclose their taxes and earnings in a move to curb tax avoidance.

While the move is likely to be welcomed by some, the EU executive still refuses to budge on allowing MEPs full access to tax sins committed by member states in the past.

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A commission spokesperson told reporters in Brussels on Monday (8 February) it was studying the idea to make US multinationals like Amazon and Google reveal their earnings and how much they are taxed to the wider public.

"The aim to find out whether requiring companies to disclose information about the taxes they pay could help tackle tax evasion and aggressive tax practices in the EU," reporters were told.

The commission will finalise its "impact assessment" before the end of March followed by a possible proposal in mid-April.

The idea marks a major shift in a previous proposal announced in late January that would only force companies to disclose the information to national tax authorities as part of its anti-tax avoidance package.

The original plan to limit access to national authorities was widely critised by pro-transparency groups like the Brussels-based European Network on Debt and Development (Eurodad).

But EU officials, for their part, say they have been working on the impact study since mid-September last year.

They want to assess "the objectives, the benefits, the risks and safe guards" of public country-by-country reporting. The report will be published once completed.

The idea has received wide support from EU tax commissioner Pierre Moscovici, capital markets commissioner Jonathan Hill, and Valdis Dombrovskis, the commission vice-president for the euro.

"It might be something as simple as companies being asked to publish their taxation information on their websites but it really depends, we won't really know until the impact assessment is finished and until the proposal is on the table," said an EU official.

Brake on document access

The future proposal follows a separate dispute between MEPs looking into corporate tax avoidance schemes and the European Commission.

MEPs in the European Parliament's special committee on tax rulings have until June to probe secret state-sanctioned tax busting deals tailored for multi-nationals.

The committee was launched after the LuxLeaks scandal broke in November 2014.

The International Consortium of Investigative Journalists (ICIJ) had found nearly 340 companies managed to slash their global tax bills after accountancy firms PwC, Ernst & Young, Deloitte and KPMG helped broker so-called sweatheart deals with tax authorities in Luxembourg.

While the parliament's tax committee has been granted to 415 confidential documents, some of them redacted, on tax information from 13 EU states, its say the conditions imposed by the Commission are too restrictive.

MEPs are not allowed to take notes and only three per political group is allowed access for limited time in a special reading room.

Fabio de Masi, a German MEP from the United Left, says they should have unlimited access to all the documents, including minutes of meetings held between member state tax authorities.

Last month he filed a lawsuit with the European Court of Justice in Luxembourg to force the commission to disclose the papers.

His lawyer wants the case accelerated so the MEPs can probe the files before their tax committee mandate ends in June.

"If this information is released a year from now, it would be a lot less useful to the work of the parliamentarians," said an European Parliament source.

MEP takes EU to court on tax transparency

An MEP has filed a lawsuit against the EU commission on document access, amid broader fight for transparency on how EU states manipulate tax deals with corporations.

Panama Papers: EU's Canete implicated in leak

Financial dealings of EU climate commissioner Canete are revealed in leaked documents called the Panama Papers, which also shed light on finances of the leaders of Iceland, Russia and Ukraine.

EU to toughen corporate tax disclosures

EU financial services Commissioner Jonathan Hill is set to present a bill to make it more difficult for big firms to hide their assets from tax authorities.

MEPs ponder how to fight tax havens

After the Paradise Papers brought new revelations about tax dodging across the globe, including in the EU, the European Parliament wonders how to step up the fight.

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