BRUSSELS — The European Union’s tax executive wants thousands of multinationals to disclose in what member states they make money and pay taxes, an effort to close loopholes and crack down on the use of tax havens.
Reacting to public anger over tax avoidance by some of the globe’s best-known companies and by recent revelations of offshore accounts for the rich, 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 more than $850 million in global revenues and do business in the 28-country 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 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 at the heart of the latest tax avoidance scandal.
The commission says the rules would affect about 6,000 companies overall, with socialist legislators estimating it would affect fewer than 2,000 EU companies.
The EU estimates it loses up to $80 billion in revenue every year because of tax avoidance. And since the global financial crisis forced budget cuts in many EU nations, the outcry against tax avoidance by the rich has become louder.
It has also become clear that companies could shop around among the EU’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.
