EU plan for tax transparency hits obstacle

EU plans to force multinational companies to publicly reveal the taxes they pay in different countries have hit a political obstacle as German Finance Minister Wolfgang Schäuble expressed strong concerns about the measure.

“Sometimes there is a contradiction between transparency and efficiency,” Mr Schäuble said at a meeting of EU finance ministers in Amsterdam on Saturday. “We have to be cautious about lining someone up to be pilloried publicly.”

Schäuble added that Germany’s regional governments, which have an important say over tax policy, are firmly against the proposal.

Dutch Finance Minister Jeroen Dijsselbloem, who chaired the meeting, acknowledged that EU nations were split over the plan, which was presented by the European Commission this month and would require large companies to disclose taxes they pay and profits they make on a country-by-country basis.

The Commission has said that the proposal is a key part of its agenda to tackle tax avoidance in the wake of the Panama Papers revelations. The move is strongly supported by the UK and France, while tax campaigners have called for parts of the draft law to be beefed up so that businesses have to disclose more detailed information on their activities. The European Parliament also supports the initiative.

Mr Schäuble was one of several ministers to express concerns at the Amsterdam meeting. The proposals have been criticised by business groups, which say that they threaten to place companies at a competitive disadvantage compared with global rivals. Both Austria and Malta share Germany's reservations. The plans would require support from the EU parliament and a weighted majority of nations to take effect.

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“There are different views, as it’s often the case at the start of discussions,” Mr Dijssebloem said, adding that the EU was only at the start of negotiations. Formal talks on the draft law are set to begin next month.

On Friday Eurozone finance ministers claimed a breakthrough after months of wrangling over the next stage of Greece’s economic bailout, indicating they are willing to start talks on easing a mountainous debt burden.

Mr Dijsselbloem said the talks had been unblocked in part by a commitment from Greece for a "contingent" package of economic reforms, equivalent to 2 per cent of its GDP, that could be activated if Athens starts to slip in meeting its debt and deficit targets.

– Copyright The Financial Times Limited 2016