Economy & Politics

Multinational Tax Transparency Agreement

MEPs and the European Council, which represents the EU member states, found a political compromise on Tuesday evening to force the major global players to declare their profits, as international pressure increases in favor of taxation more important.

MEPs and the European Council, which represents the EU member states, found a political compromise on Tuesday evening to force the major global players to declare their profits, as international pressure increases in favor of taxation more important.

(AFP) – The agreement on a new directive, resulting from a proposal from the European Commission presented in 2016, provides that multinationals with annual turnover above 750 million euros will be required to declare their profits , number of employees and amount of their taxes in each of the EU countries in which they operate, as well as in jurisdictions that are blacklisted as EU tax havens.

This obligation of “public country-by-country reporting” was welcomed by the Portuguese Presidency of the Council as well as several political groups in the European Parliament, including the Social Democrats and the Greens, as an important step forward for more tax justice. But many NGOs and the radical left have voiced criticism.

The deal reached by the negotiating teams has yet to be formally approved by MEPs in plenary and by the European Council. It comes at a time when discussions at the OECD on taxing the profits of multinationals have been revived by a proposal by US President Joe Biden to introduce a minimum tax rate of 15%.



The Biden administration’s support for the project to create a minimum threshold for the taxation of international corporations appears to be the return of the United States to the path of multilateralism, Pierre Gramegna said Thursday, who said he wanted to put an end to “the race towards the bottom ”in terms of taxation.


The new European directive was proposed in response to a series of international tax scandals such as the LuxLeaks and the Panama Papers. But it has been blocked for five years by several member states, including Luxembourg and Ireland. “As our fellow citizens strive to overcome the effects of the pandemic, it is more crucial than ever to demand real financial transparency,” commented the Portuguese Minister of the Economy, Pedro Siza Vieira, assessing at 50 billion euros per year lost revenue in the EU linked to tax evasion.

“Transparency is an essential and formidable tool to combat the scourge of tax evasion. The agreement reached today therefore constitutes major progress, ”said MEP Damien Carême for the Greens. However, he regretted the introduction by the European Council of a “safeguard clause” which could allow certain companies to avoid their reporting obligations.

The radical left denounced a “discount agreement” because it “restricts the application of public reporting to (…) only 46 countries, or less than 20% of the jurisdictions in the world”. “This agreement leaves aside more than 80% of states in the world, including notorious tax havens such as the Bahamas, Switzerland or the Cayman Islands, for which companies will not have to publish any information. How can we claim to fight against tax evasion with such partial data? ”Responded MEP Manon Aubry (France Insoumise).

Several NGOs, including Oxfam, Attac, CCFD-Terre solidaire, Anticor, Sherpa, Transparency International, denounced “a real failure”. “While a single subsidiary allows tax evasion, it is essential that the reports cover all the countries of the world (…), in order to be able to analyze the artificial transfers of profits”, they declared in a joint statement, deeming the measure “inoperative”.


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