The new rules – coming in the wake of the LuxLeaks and Panama Papers that found widespread use of tax havens by multinationals – including Google, Amazon and Apple – to offshore transactions, to avoid paying taxes in countries in the EU where those transactions took place and where taxes are payable.
Other tax dodges include the use of so-called "sweetheart deals" in countries like Luxembourg and Ireland, where the tax regime is more benign that in other states. These procedures – which are totally legal – are known as "aggressive tax planning."
The European Commission has proposed making companies report their actual profits on a country-by-country basis, but this information would only be shared between tax authorities and not available for public scrutiny.
However, critics say the new tax arrangement – for multinationals with a total consolidated group revenue of at least US$847 million – will only involve passing tax information between member states' tax agencies and will not be made public or available to journalists.
Our chair @JoseUgazSM on challenge ahead to ensure govt #AntiCorruptionSummit agreements go beyond words #EndSecrecy pic.twitter.com/1HhDZAqFBR
— Transparency Int'l (@anticorruption) May 12, 2016
'Threshold Makes No Sense'
Transparency International EU says that setting the threshold for companies covered by the reporting requirement at US$847 million in annual consolidated turnover would – according to the OECD’s estimates – exclude 85-90 percent of multinationals from the reporting requirement. A lower threshold would cover more companies, providing more data on the activities of multinationals and ensuring a more level playing field.
The Socialists & Democrats (S&D) proposed an amendment to lower the threshold.
"This threshold makes no sense. It should be much lower," said Emmanuel Maurel, a French Socialist MEP.
Elena Gaita, Policy Officer on Corporate Transparency at Transparency International EU told Sputnik in April:
"The Commission has squandered a golden opportunity to make companies more accountable. The last minute addition of tax havens smacks of window dressing. Companies will still be able to strike favorable deals with governments in other parts of the world without public scrutiny."
"It's baffling why the Commission has proposed a cumbersome and contentious process to create a list of tax havens when there is already a simpler solution. Full public country-by-country reporting applying to the whole world would produce better results. This proposal cannot be called public," she said.
