Ireland may need to revise its corporate tax rules following EU moves to shed more light on the tax bills of multinationals.
Yesterday, the European Commission published a draft law requiring corporations with global revenues in excess of €750m to upload detailed profit and tax information on their websites, broken down country by country.
Ireland stops short of requiring public disclosure, asking companies to share information only with tax authorities, a standard adopted last year following an international agreement at the OECD.
However, the commission wants to go further, especially in light of the Panama papers scandal, which revealed how shell companies were being used to shift profits offshore, out of sight of national tax authorities.
“Our economies and societies depend on a tax system that’s fair, a principle that applies both to individuals and to business,” said Jonathan Hill, the EU’s financial services commissioner.
“Yet today, by using complicated tax arrangements, some multinationals can pay nearly a third less tax than companies that only operate in one country,” he said.
The EU estimates that governments lose between $50bn and €70bn a year through companies and individuals that exploit legal loopholes to minimise their tax bills.
The new rules, which need to be approved by a majority of EU countries and the European Parliament, could come into force in 2018.
“This proposal and the impact assessment have been prepared by the commission and have not yet been studied or discussed by member states,” a spokesman for the Department of Finance said. “They will now be discussed by the member states in council and also by the European Parliament.”
The spokesman confirmed information disclosed to the tax office under existing rules would remain confidential.
Under the draft EU rules, multinationals such as Apple, Google, and Amazon would be forced to disclose staff numbers and activities at their EU subsidiaries and branches, as well as turnover, profits, taxes due, and taxes actually paid.
They would have to reveal the same details about their operations in a number of tax havens named on a new EU blacklist, and publish an aggregate figure for taxes paid outside the EU.
Since last year, EU banks and extractive and logging companies have been subject to public country by country reporting, but the new rules would catch a further 6000 corporations in their net, including non-EU banks and retail and computer giants.
However, transparency campaigners have said the rules do not go far enough.
“Unscrupulous firms will simply move their tax activities to countries not covered by the obligations,” said UK Green MEP Molly Scott Cato. “We will only have true tax transparency if corporations are obliged to publicly list their profits and tax payments in all countries they do business.”
Businesses have also hit out at the proposals, with pan-EU companies’ federation BusinessEurope saying they make the EU “a lone front runner in terms of public disclosure” and “risk undermining” foreign investment in the bloc.
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