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The EU has signed a treaty by forcing foreign countries to declare profits and taxes

EU negotiators have agreed to force large multinational corporations to publicly declare their potential benefits and pay taxes as part of Europe’s efforts to curb corporate taxation.

After years of negotiations, EU governments and members of the European Parliament have signed treaties with the world in the so-called global taxation of large companies operating in the same market and in non-EU areas mentioned in the Brussels tax list.

This has been hailed as a way to improve tax revenue and it comes at a time when international lawmakers are pushing for a change in corporate tax reform. The G7 countries are expected to finalize a political agreement by the end of this week to raise appropriate taxes up to 15 percent.

“I believe that this agreement on international reports is just the beginning of the reform of taxation and economic transparency in Europe,” said Evelyn Regner, left-wing MEP who led the debate in the European Parliament.

In accordance with EU law, a company with an international income of at least € 750m for two consecutive years must publicly disclose the amount of taxes it pays in each of the 27 blocs and 19 other states that the United States has considered the EU tax regulator “do not participate”. These include “selected” territories such as Guam and the US Virgin Islands, as well as the tax districts “Panama, Fiji and Samoa.

Big companies already have a responsibility to report their profits to EU tax regulators but this has not been made public.

€ 50bn- € 70bn

Comparing the annual losses of EU governments from corporate tax avoidance

Politicians and taxpayers celebrated the agreement as the first step in measuring corporate tax rates within the EU. Brussels says EU governments lose about € 50bn- € 70bn a year from corporate tax.

The agreement ends a long battle over legislation that Brussels negotiated earlier in 2013 but was suspended by opposition from EU governments. Major international laws reflect the need for EU disclosure to the banks that agreed to it after the financial crisis.

But much of the deal on Tuesday was criticized by tax rights activists and left by MEPs to restrict the amount of disclosures to the EU and beyond.

“The treaty leaves more than 80% of the world’s governments, including taxpayers such as the Bahamas, Switzerland or the Cayman Islands, where companies will not print anything,” said Manon Aubry, MEP and colleagues – Europe’s left-wing leader in the European Parliament.

Tove Ryding, from the European Network on Debt and Development, said the deal was a “must-have” opportunity to force large corporations to identify all tax-exempt countries.

“We need to allocate shares of all kinds where there is a multinational company, otherwise companies can hide their profits in governments where there are no clear laws,” Ryding said.

Sven Giegold, Germany’s Green MEP, said that while he would like to have international disclosure laws in place, Tuesday’s agreement was “a major step forward today in full view.” He added that more countries could follow the same rules, and finally present the whole picture.

Under the final agreement, companies may refrain from disclosing information that appears to be “subject” for up to five years. Respondents have decided to review the law every four years since member states require it.

Gabriel Zucman, an economist and director of the EU-sponsored European Tax Observatory, which will monitor corporate tax evasion, said the agreement was “a major component of exhibitions in the EU and around the world”.

“The global knowledge of high-income companies and the taxes paid by foreign companies is important to monitor tax avoidance and to consider positive tax practices,” Zucman said.

The agreement is still in the final vote with most of the MEPs and EU governments expected to spend the summer.

Additional reports from Sam Fleming in Brussels


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