After five years of attempts and blockades, representatives of the European Parliament and the Council have managed to close on Tuesday a provisional agreement on the directive that will force multinationals and their subsidiaries to bill more than 750 million euros per year for two consecutive years, to declare their benefits country by country as well as the amount of taxes paid in each Member State, which will represent a giant step in the fight against tax evasion and tax transparency.
“The avoidance of corporate tax and aggressive tax planning by large multinational companies deprive the countries of the European Union more than 50,000 million of annual income.
These practices are facilitated by the absence of obligation for large multinationals to report where they make profits and where they pay taxes country by country. It is more crucial than ever to demand significant financial transparency, ”said Portuguese Minister Pedro Siza .
“We would have liked to see a more solid position on the transparency of the Board” but “after five years of waiting we have managed to bring positions closer to the obligation to inform, accessibility to information, the duration of the safeguard clause and the terms of the clause review to name a few ”, has indicated the MEP and negotiator, the Spanish socialist Iban García del Blanco , on a provisional agreement that will now have to be endorsed by the economic and legal affairs committee of the Parliament and the Council.
Thereafter, Member States will have 18 months to transpose the directive into their respective national laws.
Also tax havens
According to the agreement, all companies or their subsidiaries with a business volume greater than 750 million euros for two consecutive years will have to report, among other issues, the number of employees, net business volume, profits or losses before of taxes, the corporation tax paid and the nature of your company activities by member states.
In addition, they will also be obliged to disclose these details of the countries that appear in the non-cooperative jurisdictions of the EU (the black and gray list of tax havens) although for the rest of the countries companies may present aggregate figures.
The rule, which was presented in April 2016 on account of scandals such as the Panama Papers or the Luxleaks , will mean, as highlighted by MEP Ernest Urtasun (Catalunya en Comú), that “people will be able to know how many taxes are paid by large companies and where ”, has celebrated what he considers“ a victory ”in terms of tax transparency because it will help multinationals put an end to aggressive tax planning practices and profit shifting.