While the European Parliament has proposed to strengthen the rules on transparency for multinational corporations, an important loophole means corporations might still be able to hide profits in tax havens.
MEPs voted today to require multinationals to disclose relevant information for all countries in which they have operations worldwide. However they also introduced a loophole which provides corporations with the possibility to ask for exceptions to the disclosure of certain detailed information in countries when there are concerns about commercial confidentiality. These complicated new exemptions could potentially be exploited by multinational corporations looking to keep profits hidden in tax havens.
Commenting on the vote today, Enrico Somaglia EFFAT Company policy officer said: “It is clear that Corporate tax avoidance is a problem that stretches beyond the frontiers of Europe. In this regard today’s vote is not encouraging. The risk that the “get out” clause will be abused by multinationals in order to avoid having to report on some of their operations in certain countries is now real“ .
In the coming months, it will be crucial to ensure that the European Parliament’s text is not weakened even further by the EU Member States and to get clarity on what the new exemption entails. We call on the EU Member States and Parliament to ensure that the new mechanism cannot be misused to multinational corporations trying to hide their profits in tax havens.