The European Commission is bringing forward plans to make major multinationals such as Google, Amazon and Facebook disclose exactly where and how much tax they pay across the continent.
The draft legislation being tabled on Tuesday was proposed before the latest Panama Papers scandal, but comes amid a growing clamour to force the biggest companies to pay their fair share.
The plan was expected to include rules requiring businesses earning more than £600 million a year to open up their tax affairs to public scrutiny, revealing their profits and accounts in every country in which they operate within the EU.
Since the Panama Papers, a new clause has reportedly been added to require the companies to say how much money they make in so-called “tax havens”. A final, more general statement would reveal profits in the rest of the world, treated as a single item.
According to The Guardian, commission president Jean-Claude Juncker is said to be in favour of pushing through the initiative.
But is has come under early fire from both campaigners who say it will be toothless and business groups warning some multinationals could be put off operating in Europe altogether.
There are also some concerns surrounding the fact that there is no common view between EU members states on what constitutes a tax haven.
The plans will be presented by Britain’s EU Commissioner, Lord Hill, who told the BBC: “This is a carefully thought through but ambitious proposal for more transparency on tax.
"While our proposal on [country-by-country reporting] is not of course focused principally on the response to the Panama Papers, there is an important connection between our continuing work on tax transparency and tax havens that we are building into the proposal.”
With banks, mining and forestry companies already covered by similar reporting rules, the new proposals would see transparency brought to around 90 per cent of corporate revenues in the EU.
It remains to be seen what powers the EU would have to actively tackle tax minimisation, beyond the process of naming and shaming.
