BRUSSELS (AP) — The European Union’s executive wants thousands of multinationals doing business in its 28 nations to disclose where they make money and pay taxes on a country-by-country basis, an effort to close loopholes many have exploited to avoid paying taxes.
Reacting to public anger over tax avoidance by some of the globe’s best-known companies and boosted further by recent revelations of offshore accounts for the rich and famous, EU Taxation Commissioner Jonathan Hill said he wanted “to make sure that taxes are paid where profits are generated.”
He presented proposals Tuesday that would force companies that have over 750 million euros ($850 million) in global revenues and do business in the EU to publish how much income tax they pay in each member state and how much they pay on outside-EU business.
Hill said the rules would specifically target companies that do business in nations or territories that disregard good governance standards on taxation.
“So if large multinationals active in Europe are paying tax somewhere like Panama, to take one example, they would need to make that public,” Hill said, taking a swipe at the Central American nation already at the heart of the latest tax avoidance scandal.
The Commission says it would affect some 6,000 companies but socialist legislators estimated it would affect less than 2,000.
The EU estimates it loses up to $80 billion in revenue every year because of tax avoidance, and ever since the global financial crisis forced budget cuts in many EU nations the outcry against tax avoidance by the rich has become louder.
“Using complicated tax arrangements, some multinationals can pay nearly a third less tax” than local companies operate only inside national borders, Hill said.
Over the past years, it has also become clear that companies operating in the EU could shop around among the bloc’s member states for the most convenient tax arrangement. That has led to several huge companies paying almost no taxes on the profits they generate within a country.