The starting gun has been fired in the pursuit of the world's biggest companies - such as Amazon, Apple, Facebook and Google - to pay their fair share of taxes in the jurisdictions in which they operate.
The EU has agreed it will force large multinational companies to publish a breakdown of the tax they pay in each of the bloc’s member states and in tax havens such as Seychelles, piling pressure on the UK government to follow suit.
After years of stalled talks, a deal was struck on Tuesday evening between EU governments and MEPs on public country by country reporting, a policy designed to expose how some of the world’s biggest companies – such as Amazon, Apple, Facebook and Google – avoid paying an estimated $500bn (£358bn) a year in taxes through shifting their profits.
Under the new rules, companies with global revenues of at least €750m (£645m) over two consecutive years must publicly disclose how much tax they pay in each of the EU member states and in 19 jurisdictions put on black and grey lists that are regarded to varying degrees as being “non-cooperative”.
Alex Cobham, from the Tax Justice Network, said the EU decision opened the door for others to follow. “Such a move is now being considered by the US Congress and the Securities and Exchange Commission, and the legislation already exists in the UK – albeit unused,” he said.
The idea of large companies reporting their profits publicly was first tabled by the European Commission after the 2014 LuxLeaks scandal exposed the sweetheart deals being offered by Luxembourg, but majority support has been difficult to find among the member states until this year.
Yesterday, the G7 group of wealthy nations signed a landmark deal to tackle tax abuses by multinationals and establish a minimum global corporation tax for the first time. Finance ministers from the world’s richest economies agreed the historic deal as part of talks held in London, the UK Chancellor, Rishi Sunak, said.
As part of the plan, finance ministers also agreed to the principle of a global minimum rate that ensures multinationals pay tax of at least 15 percent in each country in which they operate.
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