Business
Following outcry over the Panama Papers, the E.U. proposed new laws for corporate tax disclosure.
The Wall Street Journal reports:
Large multinationals operating in the European Union will have to publish details of profits and tax bills generated in countries considered to be “tax havens,” the bloc’s executive arm said on Tuesday as it toughened up proposals for fighting tax avoidance following the “Panama Papers” leak. The European Commission had already been working on plans to open up to the public reports by thousands of companies on profits reaped and taxes paid in individual EU countries—an unprecedented move for a major jurisdiction. But the EU has reworked its proposals in recent days to require more exhaustive reporting of companies’ operations in tax havens after newspapers around the world uncovered thousands of offshore accounts—allegedly held by officials, executives and celebrities—via documents leaked from the Panamanian law firm Mossack Fonseca & Co.
All large companies trading in Europe, including subsidiaries of non-European businesses, would have to publish how much tax they pay outside the EU, including detailed country-by-country information on their finances in tax havens. The commission was already working on measures to force international companies to disclose their earnings and tax bills in the EU. Following the leak of 11.5m files exposing the tax secrets of the global elite, officials have toughened up their plans to include tax havens. Lord Hill, the European commissioner in charge of financial services, confirmed on Monday that the proposals were being extended to tax havens, in response to the public outcry over the revelations in the Panama papers. The massive data leak had “shifted the public mood” and it was sensible to reflect that in the proposals, he told the Guardian and two other European newspapers in an interview.
Reuters notes:
The proposed measures raised concerns among anti-corruption campaigners, who accused Brussels of being too soft on tax evasion. Business associations warned that the plan would damage EU companies. "We do not wish to see the EU become a destination which businesses consider too reputationally risky and administratively burdensome in which to invest," said Chas Roy-Chowdhury, head of tax at ACCA, a global accounting body. He called for limiting disclosures to tax authorities, avoiding a general public display. "Competitors will acquire sensible information on the structure and margins of a company due to the obligation of reporting", said Markus Kerber, chief of the German industry association BDI. Center-right lawmakers shared those concerns. But tax transparency activists and center-left lawmakers accused the Commission of not going far enough. Advocacy group Oxfam held a demonstration on Tuesday against tax havens in the EU district in Brussels, calling for the disclosure of tax information in all countries where companies operate. "The Commission is only proposing reporting obligations for firms' activities in a restricted list of countries, mainly within Europe, with crucial countries like the US and Switzerland excluded," EU Green lawmaker Molly Scott Cato said. "Unless the reporting obligations cover all countries, it will be impossible to find out if and how firms are channeling funds to tax havens," she said.
