The
European Union will launch plans Thursday to stamp out tax avoidance by
multi-national corporations whose rock-bottom tax bills have provoked public
outrage.
The plans
are part of a multi-pronged push by the European Commission, the EU's executive
arm, to combat tax avoidance, alongside investigations into the tax deals of
major groups such as Starbucks, McDonald's and Fiat.
It (Other
OTC: ITGL - news) comes as Google agreed on Friday to pay £130 million ($185.4
million, 172 million euros) in back taxes to Britain after a scathing
government inquiry into the search giant's tax arrangements.
"Recent
studies at the European parliament estimate the revenue loss at around 50 to 70
billion euros ($55-75 billion) a year, roughly the equivalent of the GDP of
Bulgaria," said Economics Affairs Commissioner Pierre Moscovici during a
news briefing.
"It is
money that is taken from our hospitals, schools, transport, security and other
vital public services," the former French finance minister added.
The
European Commission said major corporations whose business spans continents
will now be obliged to report profit country by country in an unprecedented
break with the previous practice of moving money across borders to save on tax.
Another
requirement will compel nations to agree on minimum standards for drawing up
tax rules, so that multinationals stop the practice of shopping around for
loopholes to avoid paying tax altogether.
"The
days are numbered for companies that excessively reduce their tax bills,"
Moscovici said, adding that he hoped to finalise the proposals this year.
The 28 EU
member states have passed a number of measures since the LuxLeaks scandal in
2014 revealed that top companies, including Pepsi and Ikea, had reduced their
tax rates to as little as one percent in sweetheart deals with Luxembourg.
The
revelations, unearthed by a group of investigative journalists, were a huge
embarrassment to European Commission head Jean-Claude Juncker, who served
almost two decades as Luxembourg's prime minister at the time of the deals.
The two
main proposals are part of a 15-point OECD package agreed by leaders at a G20
summit in Antalya, Turkey in November.
The OECD
calculates that national governments lose $100-240 billion, or 4-10 percent of
global tax revenues, every year because of the tax-minimising schemes of
multinationals.
Seven EU
states are not part of the OECD and the pressure will be huge for them not to
block the proposal. They are: Bulgaria, Latvia, Lithuania, Malta, Romania,
Croatia and the frequent tax avoidance destination Cyprus.
Separately,
the OECD on Wednesday said around 30 countries had signed an agreement to share
information on tax issues in a bid to stem fiscal evasion by multinational
companies.