European Union to crack down on tax avoidance
Multinational firms may be forced to declare the countries in which they make profit and where they pay tax, on a case by case basis.
This would force tax avoidance measures used by multinational firms into the spotlight as clamour grows following the publication of documents leaked from Panamanian law firm Mossack Fonseca.
The European Commission is expected to bring forward the legislation, which would affect companies trading in Europe, including those that are based elsewhere.
The firms would also have to publish how much tax they pay elsewhere.
Jonathan Hill, the commisioner for financial stability, and Valdis Dombrovskis commissioner for the euro and social dialogue, said that big firms use their financial clout to avoid tax, where smaller firms cannot.
Writing in the Irish Times, Hill and Dombrovkis said: “In the fallout from the Panama Papers, one of the issues that has rocketed up the agenda is the question of tax transparency. Today, the European commission is bringing forward proposals to increase tax transparency for multinationals operating in Europe, to shine a light into the complex and sometimes murky world of international tax.
“We need a competitive tax environment if business is to flourish but that should be a question for governments, not a consequence of clever lawyers and tax advisers coming up with ever more complicated ways of lightening tax liabilities for some.”
The introduction of such laws would no doubt infuriate US companies which have already claimed that Brussels is “disproportionately” targeting them.