EU To Pass Bill Requiring Financial Disclosures From Companies
European regulators are in the process of releasing new financial regulations which could result in multinational corporations being forced to reveal their tax avoidance measures. The move follows the stunning disclosures from the Panama Papers leak earlier this month.
The European commission is expected to introduce a bill that will require multinationals having operations in Europe to disclose the amount of profits earned and taxes paid by the company in every one of EU’s 28 member countries as well as in the tax havens used by them.
Additionally, the companies will have to reveal the amount of tax paid in countries outside the EU, which will include the amount paid as taxes in such havens. The commission had been already working on legislation requiring companies to disclose profit and tax amounts across EU but the Panama Papers leak resulted in them adding tax havens to the list covered by the bill.
FRANCE 24 English
The European commissioner in charge of financial services Lord Hill confirmed this week that the bill would include tax havens after the commission was forced to take into account the public uproar caused by the massive leak of 11.5 million documents from a Panama law firm which uncovered secret financial dealings of wealthy individuals worldwide.
The bill was originally prompted by revelations that global corporations like Apple and Starbucks paid minimal taxes despite large profits thanks to preferential tax laws for corporates in some countries. According to the European parliament, corporate tax avoidance results in annual losses upto €70 billion.
The new law will require all companies with a turnover more than €750 million to have more extensive disclosure of their financial information. These tougher laws are expected to improve public trust and confidence.
In a statement Hill said,
There is a sort of anti-business mood afoot, which I don’t think is healthy because you need to have a strong business sector, which is creating jobs and playing for public services. If you get something like this right it should help in that process
The proposals have to be approved by a majority of EU finance ministers as well as the European parliament before they can be implemented. A major issue facing EU authorities is the absence of a definitive official list of tax havens. Commission officials have said that they would put one in place within six months.
Groups representing business interests have expressed their unhappiness at the prospect of country-level reporting, stating that the authorities are succumbing to public pressure.
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