The European Union has unveiled a plan to force certain companies to disclose more of their tax information for each EU state separately and try to recover the nearly €50-70 billion ($57-80 billion USD) lost by EU states each year to corporate tax avoidance.
The new rules will apply to multinational companies who make more than €750 million ($850m USD) in sales every year. The companies who fall into this category are the likes of Amazon, Facebook and Google, many of which have been revealed to pay next to nothing in taxes. Facebook, for example, was found to have paid as little as £4,327 ($6,173 USD) in British taxes in 2014.
The following applying only within the EU, these companies will be required to reveal their activities and number of employees, their net turnover from business conducted both alone and with other companies, net profit, as well as the amount of income tax due and paid.
A result of the recent Panama Papers scandal also saw the addition of a clause that requires these companies to declare the amount of profit made and tax they have paid from ‘Tax Havens’. Aside from these offshore accounts the proposal allows all profits generated outside the EU be treated as a lump sum.
There are around 6,000 companies who will fall under the new rules, a third of which are headquartered in the EU. These companies are among the largest in the world and represent almost 90% of all multinational turnover in the EU.