A European Commission plan to publicly reveal tax and financial data of large companies raised concerns among many EU finance ministers, who, on Saturday advised caution after the Panama Paper leaks.
Under pressure after the revelations about offshore firms hiding wealth, the EU executive on April 12 proposed a plan to increase tax transparency of multinational companies, including public disclosure of their activities in tax havens.
Companies have warned of reputation risks, as some data may be misinterpreted if made publicly available. Non-EU firms could also acquire valuable information on their EU competitors, damaging their competitiveness, trade associations said.
German Minister of Finance Wolfgang Schaeuble questioned the effectiveness of the commission’s plan at the end of a two-day finance ministers meeting in Amsterdam and indicated German federal states opposed public disclosure of companies’ tax data.
“Many people and entities are more willing to share information when they do not have to fear the effect of a public pillory,” he said, backing disclosure only to tax authorities.
“We should not overreact,” Maltese Minister of Finance Edward Scicluna said, warning against the competitive risks for EU companies if overly strict transparency regulations were adopted.
“We would prefer that as a first step, [corporate tax data] should be available to tax authorities, not to the public,” he said.
Belgian Minister of Finance Johan Van Overtveldt said the ministers “have to be careful about privacy rights.”
Taking note of the “different views” among ministers, Dutch Minister of Finance Jeroen Dijsselbloem said that the topic would be formally addressed at a new meeting during his country’s presidency of the EU in this first half of the year.
He said that the talks would have to continue beyond the summer to reach a possible compromise on the subject.
The EU draft rules would require firms with an annual turnover of more than 750 million euros (US$841.8 million) to publicly disclose their tax data in all EU countries where they operate.
With a last-minute tweak, the commission extended this new disclosure requirement to corporations’ activities in so-called tax havens, jurisdictions that facilitate companies and individuals to hide their taxable income.
The European Commission had initially proposed in January that companies’ detailed tax data should be available to tax administrations in each EU country, but not to the wider public.
Anti-corruption campaigners have urged the EU do to more than what proposed so far, extending public disclosures to all countries and to more companies.
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