European Parliament proposes new tax transparency rules for large multinationals, but dangerous loophole remains
The European Parliament voted today to strengthen rules on tax transparency for multinational corporations, but included a significant loophole which could undermine the efforts to stop multinational corporations from hiding profits in tax havens.
While MEPs voted to require multinationals to publish data on the profits and taxes they pay on a country by country basis for each country where they operate, they also introduced a loophole, which allows multinational corporations to ask for exceptions to the disclosure of certain detailed information in specific countries. This introduces the risk that multinational corporations can keep hiding their profits in tax havens..
“The Conservatives and Liberals successfully introduced a loophole, which can become a bomb under the efforts to make multinational corporations pay taxes. They added a new complicated exemption clause, which might be exploited by multinational corporations looking to keep profits hidden in tax havens,” said Tove Maria Ryding, tax campaigner at Eurodad, the European Network on Debt and Development. “As a result, citizens, journalists, civil society organisations and parliamentarians may not be able to get the necessary information that they need to identify multinational corporations dodging taxes.”
“The EU has already introduced public country by country reporting for the banking sector with no exemptions,” said Ryding. “We are very disappointed they haven’t done the same for all large multinational corporations. We need more clarity on what the exemptions will mean in detail, to ensure the new mechanism cannot be misused by big businesses trying to hide their profits in tax havens. It’s also vital to ensure that the Parliament’s proposals are not watered down even further by Member States in the coming months.”