EU Pushes Big Business|for Tax Transparency

     (CN) – The European Commission on Tuesday proposed requiring multinational corporations to publish how much tax they pay to every EU state, part of an ongoing effort to crack down on tax-dodging and sweet corporate-tax deals.
     “Our economies and societies depend on a tax system that’s fair, a principle that applies both to individuals and to business. Yet today, by using complicated tax arrangements, some multinationals can pay nearly a third less tax than companies that only operate in one country,” taxation commissioner Jonathan Hill said in a statement. “Our proposal to increase transparency will help make companies more accountable. It will promote fairer competition between companies regardless of their size.”
     Besides disclosing how much tax large multinational corporations pay to each EU member state, the commission’s proposal would require corporations to disclose how much tax they pay on business done outside the European Union. While these figures can be aggregated, any business done in nations known to be tax havens must be disclosed separately and in full – a move to address concerns stemming from revelations of tax-dodging made by the so-called Panama Papers released earlier this month.
     “Any multinational company – European or not – that is currently active in the EU’s single market with a permanent presence in the union and that has a turnover in excess of 750 million euros would have to comply with these additional transparency requirements,” the commission said in a statement.
     Additionally, the corporations must provide information on the nature of their EU activities on a state-by-state basis, the number of people they employ, their net turnover – including that of their subsidiaries, profit before tax, income tax due versus amount of tax actually paid, and accumulated earnings.
     The reports should also include an explanation for discrepancies between taxes owed and paid, the commission said.
     Hill said the commission’s proposal is meant to protect small- and medium-sized businesses from multinational powerhouses.
     “It should not be the case that smaller companies, which are not able to shift their profits or cannot afford clever tax advice to minimize their bills,” Hill said. “It is not right that they are at a competitive disadvantage to big multinationals.
     “I say this as someone who is unashamedly pro-business, and unashamedly pro-competition. But I would prefer businesses to be concentrating on their customers, on service, on product innovation, on true competition – rather than competition of the creativity of their tax advisers.”
     The commission’s proposal comes amid completed and ongoing investigations of sweet corporate-tax deals to multinational corporations by member states. Earlier this year, the commission ordered Belgium to claw back $760 million in tax breaks given to 35 multinational companies in an excess profit tax scheme.
     In 2015, the EU’s regulatory and administrative body ordered the Dutch and Luxembourgish governments to claw back up to $67 million in unpaid taxes from Starbucks and Fiat, respectively. Meanwhile, similar investigations into whether Ireland’s deal with Apple and Luxembourg’s tax treatment of Amazon comply with state-aid rules continue.
     The commission’s proposal heads to the European Parliament for its consideration and then to the EU Council for final approval by a qualified majority.
     If approved, member states would have one year to pass national legislation transposing the transparency requirements into law.

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