European Union government and parliament negotiators reached a deal on Tuesday on rules that will force large multinational companies to disclose how much revenue and tax they pay in the 27-nation bloc and how much in countries considered tax havens by the EU.
The new law, proposed by the European Commission in 2016, is part of the EU’s efforts to fight tax avoidance by large international companies at a time when the EU badly needs cash to finance an economic recovery after the COVID-19 pandemic.
Under the new law, multinational corporations with a turnover of more than 750 million euros ($916 million) annually in two consecutive years will have to declare profits, tax and number of employees in EU countries and in countries on the EU list of non-cooperative jurisdictions.
But data on tax paid in other countries outside the EU and not on the tax havens blacklist will only be given in aggregated form as EU governments did not want to agree to a more detailed country-by-country breakdown.
The Oxfam charity group criticised that saying many of the world’s tax havens were not on the EU list of non-cooperative jurisdictions and therefore would avoid scrutiny.
“Transparency for only the 27 EU member states and the 21 currently blacklisted or greylisted jurisdictions means keeping corporate secrecy for over 3 out of 4 of the world’s nearly 200 countries,” the Oxfam charity group said.
“EU legislators have granted multinational corporations plenty of opportunities to continue dodging taxes in secrecy by shifting their profits to tax havens outside the EU, like Bermuda, the Cayman Islands, and Switzerland,” Oxfam’s tax expert Chiara Putaturo said.
She said the deal also offered companies a reporting exemption for commercially sensitive information for five years, providing a way to avoid disclosure and noted the large turnover requirement would exclude up to 90% of multinationals.
The FTSE MIB climbed up by 0.60% to 25,321.04. In the cash markets, the DAX futures Germany was trading up 0.95% to 15,567.17. CAC 40 futures in France rose by 0.66% to 6,489.60 while the FTSE 100 futures in the U.K. was up by 0.82% to 7,080.93 ,at the time of writing.