EU ministers to push corporate tax avoidance rules

Europe’s finance ministers Tuesday gave their backing to new rules that will shine a light on the tax affairs of multinationals.

The proposal would oblige large companies to provide national tax agencies with a breakdown of their global operations on a country-by-country basis, including revenues, profits, taxes paid and number of employees in each country where they operate.

The new rules “will provide national authorities with the necessary insight to combat aggressive tax planning structures,” said Pierre Moscovici, the European commissioner for economic and financial affairs.

He described Europe as being in the throes of a wider “fiscal transparency revolution” driven by the indignation of national electorates.

The European Commission is also expected to publish a proposal in April that would force companies to make such reporting public, although several European countries have expressed reservations.

“Keeping these reports confidential will make it nearly impossible for developing country governments, journalists, or the general public to scrutinize the operations of multinational corporations,” said Koen Roovers, an EU lead advocate for the Financial Transparency Coalition.

Ministers are waiting for a non-binding opinion from MEPs before adopting Tuesday’s deal into legislation.

The European Parliament has only a consultative role for EU tax legislation, which must be adopted by member countries on the basis of unanimity.

The U.K. government has made its approval conditional on the support of British MPs.

Today’s provision is part of a wider set of reforms that would make it more difficult for companies to minimize their taxes by shifting profits between countries.

The series of proposals, presented by the Commission at the end of January, would translate a historic deal brokered between members of the Organization for Economic Cooperation and Development into EU legislation. The Dutch government, which currently holds the rotating chair of the Council of finance ministers, is aiming to push through the entire package by June.