New EU rules make multinational tax details more transparent

Global Business

European Union countries will exchange information on the tax affairs of multinational companies under new rules backed by EU finance ministers, a move aimed at ensuring that big companies pay their fair share into government budgets.

These rules are likely to have an impact on Ireland-who has seen more investment by U.S. multinationals than any other European country.

CCTV’s Lourda Sexton reports.

New EU rules make multinational tax details more transparent

European Union countries will exchange information on the tax affairs of multinational companies under new rules backed by EU finance ministers, a move aimed at ensuring that big companies pay their fair share into government budgets. These rules are likely to have an impact on Ireland-who has seen more investment by U.S. multinationals than any other European country. CCTV's Lourda Sexton reports.

According to the European Parliament corporate tax avoidance costs the EU public 70 billion euro (over $78 billion) a year, so it’s not surprising that European governments are pushing for more tax transparency by multinationals.

Under a new agreement reached by EU finance ministers, large companies are obliged to provide tax details in each tax jurisdiction they do business in.

The data will then be exchanged between the 28 EU states.

This agreement mirrors legislation already brought in by the Irish government at the end of last year and tax experts say the new rules are encouraging companies to become more transparent.

Facebook is one company who recently changed its tax structure in Ireland, taking the decision to pay more taxes in the U.K. rather than route the business through their Irish headquarters.

Ireland’s success in attracting multinational investment is well renowned, the country now accounts for one fifth of U.S. investment into Europe which amounted to 283 billion euro (over $316 billion) in 2014.

The agency responsible for attracting this investment says that changes in tax rules won’t deter these companies.

While the crackdown on tax transparency is intensifying, many say that these new rules are not enough as they do not oblige companies to publicly disclose tax information, a move tax campaigners say falls short of country by country tax reporting.