Daily Times

The EU will unveil plans on Tuesday to limit the rampant use of tax havens by the world’s biggest multinationals, a measure the authorities say is made even more urgent by the Panama Papers scandal.

The European Commission, the EU’s executive arm, said under the new rules big companies operating in Europe would have to make public what they earn in each member of the 28-nation bloc.

Country-by-county reporting has for years been a major demand of tax activists who accuse big corporations of secretly shifting profits to low or no tax jurisdictions, often through the use of shell companies such as those exposed in the Panama Papers leak.

Longstanding criticisms of corporate tax policy blew up into the open with the Lux Leaks scandal in 2014, which exposed the secret sweetheart tax deals given to huge corporations — including IKEA and Pepsi — by the small duchy of Luxembourg.

EU Financial Services Commissioner Jonathan Hill will make the announcement at 1300 GMT at the European Parliament in Strasbourg, France.

Hill is Britain’s representative on the Commission and a close political ally of Prime Minister David Cameron who is under pressure in London for family links to an offshore fund exposed by the Panama Papers leak.

“This is a carefully thought through but ambitious proposal for more transparency on tax,” Hill said in a statement ahead of the plan’s release.

“While our proposal … 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,” he said.

The EU plan closely follows recommendations by the OECD agreed by G20 leaders last year. They would apply to all global companies with sales worth 750 million euros or above worldwide and with activities in the EU.

The EU said this amounts to about 6,000 companies — including 1,000 Asian firms — or 90 percent of all corporations above that size.

EU sources told AFP that companies will need to disclose information such as total sales, the nature of their business activity, profit before tax, tax actually paid and accumulated earnings. The date would be posted on a company’s website. But in a disappointment to tax campaigners, the EU plan is largely limited to activity in Europe, except if those earnings come from a black-listed tax haven.

“As long as the proposal doesn’t cover all countries, multinational corporations will still have plenty of opportunities to hide their profits,” said Tove Maria Ryding, a tax specialist at the European Network on Debt and Development.

“So instead of solving the problem, this proposal would be moving the problem from one country to another, with multinationals still able to avoid taxes,” she said.