European Union officials on Tuesday waded into the fight against international tax dodging, calling for the world’s biggest companies to disclose more data about their tax arrangements with the bloc’s member governments and to share information about offshore havens where they shelter money.
The proposed rules were in the planning before the recent leak of millions of documents from a Panamanian law firm, Mossack Fonseca. But European officials adjusted the plans in recent days to pay more attention to offshore holdings in light of the revelations in the Panama Papers.
The Mossack Fonseca files revealed how some of the world’s richest or most powerful people may have used offshore bank accounts and shell companies to conceal their wealth or avoid taxes. The European proposal is primarily aimed at stopping multinational companies from shifting their profits around Europe to lower their tax bills.
Multinational companies including Amazon, Anheuser-Busch InBev, Apple, Google and Starbucks have been part of investigations by the European Commission, the bloc’s executive arm, into the way some of the 28 member countries set taxes, including Belgium, Ireland, Luxembourg and the Netherlands.
A long political fight may lie ahead for the proposals to become law. The proposed rules will very likely meet resistance from some business groups and possibly even European governments that use tax inducements to attract companies and jobs.
And the authorities in popular tax havens like the British Virgin Islands, the Cayman Islands or the Channel Islands off Britain, might lobby to avoid being labeled “tax jurisdictions which do not respect international tax good governance standards” — as a European Union memo on the proposed rules stated, without naming any names. Deciding which jurisdictions end up on the European Union’s blacklist could prove diplomatically sensitive.