Daily Management Review

Multinationals would be Forced to Disclose Tax Agreements Under New EU Proposals.


02/08/2016




Multinationals would be Forced to Disclose Tax Agreements Under New EU Proposals.
According to legislation being drafted by the EU executive, US multinationals such as Google, Facebook and Amazon will be forced to publicly disclose their earnings and tax bills in Europe, reports The Guardian.
 
Aimed at making the world’s largest multinational corporations open their tax arrangements with EU governments to full public scrutiny, the European commission is to table legislation in early April.

Large corporate need to be made obliged to reveal their profits and the tax they pay in every country in which they operate within the EU and this decision was arrived at after initial conclusions from an ongoing impact assessment, the newspaper reported quoting three senior EU officials familiar with the proposals.

The officials said that a consensus has formed around making the rules apply to the world’s biggest conglomerates, including those from the US. Sources said that the commission president, Jean-Claude Juncker is in favour of the initiative.
 
The Guardian quoted a sources as saying:  “Eurocrats are currently finalising the impact assessment work. It’s likely there will be some form of legislative initiative announced for the beginning of April … for public country-by-country reporting.”
 
“It will likely target the large multinationals, all multinationals and not just EU ones,” said a second source to the news paper. Opinions inside the commission were swayed by the impact assessment to e large degree.
 
Large companies are more able to make secretive deals with governments on where and how they declare their profits without the public country-by-country reporting and hence it is seen as important.
 
Last month when the commission proposed that corporations report only to national tax authorities in Europe without making the information public there was heavy criticism of the commission.
 
The agreement of all 28 governments in the EU would be necessary to past he tax legislation, the new draft of which is to be presented on 12 April. However the new draft can be passed by a qualified majority, or 16 of the 28 as the new rules would be effected by amending one of two existing directives, sources said.
 
The so-called Luxleaks revelations - media exposure of how hundreds of global companies including Pepsi, Ikea and FedEx had secured secret sweetheart tax deals with Luxembourg, allowing them to save billions of euros in taxes was the source of a massive outrage in 2014 against the multinationals and how they minimise their tax liabilities in Europe.  
 
Starbucks in the Netherlands and Fiat in Luxembourg, who have been ordered to pay €30m (£23m) each in unpaid taxes, have already been found to be culpable of tax avoidance by the competition commissioner, Margrethe Vestager. 35 multinationals in Belgium were also ordered to pay €700m in dodged taxes last month by Margrethe Vestager. Apple in Ireland and Amazon in Luxembourg are at the centre of similar investigations.

The new rules will apply only to all “large” global multinationals, meaning US companies such as Google, Amazon and Facebook will fall under its scope, said officials even though the revenue threshold for companies ordered to report their earnings and taxes publicly has not yet been agreed.

(Source:www.theguardian.com) 






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