EU to force multinationals to make clearer tax disclosuresTuesday 08 March 2016 20.15
European Union countries will exchange information on the tax affairs of multinational companies under new rules backed by EU finance ministers.
The new rules are aimed at stopping big companies avoiding paying their fair share into government coffers.
The rules, that should take effect later this year, are a response to growing concerns about corporate tax avoidance.
This avoidance costs the EU public €70 billion a year, according to a European Parliament estimate.
"Today we reached a political agreement on cooperation between tax administrations, country-by-country reporting. This is part of our work on the anti-tax avoidance package," said Dutch Finance Minister Jeroen Dijsselbloem who chaired the meeting of EU ministers in Brussels.
The new rules will oblige large companies to disclose data on revenues, profits and taxes to the administrations of all EU countries where they operate.
That data will then be exchanged between the 28 EU states.
The EU deal goes beyond international guidelines known as anti-BEPS (Base Erosion and Profit Shifting), agreed by the G20 and the Organisation for Economic Co-operation and Development.
Those guidelines do not force subsidiaries of foreign countries to disclose the tax data of their parent group, whereas the EU rules will affect foreign multinationals that have subsidiaries in the European Union, EU officials said.
Due to concerns expressed by Germany and some other EU states that the measures could scare away foreign investors, the new rules will only be mandatory for foreign companies from 2017.
The rules are expected to be formally adopted by June, Dijsselbloem said.
The unanimous approval of all 28 EU states is required.
Despite misgivings from some EU governments, EU tax commissioner Pierre Moscovici is considering proposing in the coming weeks bolder provisions to make company tax data available to the public, and not just to state administrations.
A Department of Finance spokesperson said: "Ireland has already introduced country-by-country reporting into domestic law with the passage of the Finance Act, 2015 and is one of the first OECD countries to do so.
"Ireland supports all member states of the EU taking similar action and therefore welcomes the agreement reached on this directive today."