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EU member states push forward with new tax transparency rules

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By Shona Murray
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EU member states push forward with new tax transparency rules
Copyright  JUSTIN TALLIS/AFP
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EU member states agreed last week on new transparency rules for multinational companies reporting tax payments across the bloc.

The legislation, agreed by the EU Competitiveness Council, is aimed at forcing transparency among the world’s largest multinationals.

It’s hoped the legislation will act as a deterrent against aggressive tax avoidance by multinationals and EU governments.

Campaigners against tax havens say this is an important step towards tax justice.

"One of the biggest obstacles to tax justice is a lack of transparency. And tax dodging thrives on citizens and governments and the media not being able to see exactly what multinationals are doing," said Sorley McCaughey, Head of Policy and Advocacy at Christian Aid.

The regulation will apply only to companies with an annual consolidated turnover above €750 million, which excludes nine in ten multinationals. So it will only shine a light on the world’s biggest companies – such as Apple, Facebook and Google.

Multinationals avoid taxes by shifting profits from higher-tax to low-tax jurisdictions including Ireland, Luxembourg and Malta.

Although some countries such as Austria changed their previous position, several EU member states voted against the law. The decision required a qualified majority voting, as opposed to unanimity which would have given any of those countries a veto.

Certain countries such as Ireland expressed concerns regarding the precedent that may be created by not pursuing such legislation through the group of finance ministers known as (ECOFIN).

According to the Irish government, matters of taxation should be a national competence only. Their key issue around this particular decision is the process that was followed by the Council and by the Commission.

"It moved the taxation system into the Competitive Council and took it away from the ECOFIN," Irish MEP Billy Kelleher told Euronews.

“So I'm disappointed that the European Commission is trying to move taxation away from the unanimity that's required in tax matters and the moving into qualified majority and the competitive council. So that is an issue that I'm very concerned about,” he added.

The decision will go to the European Parliament and will be debated by EU ambassadors in coming weeks.