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By Joe Kirwin
German Finance Minister Wolfgang Schaeuble defended his opposition to pending European Union legislation that would force large multinational companies to publicly disclose, on a country-by-country basis, their taxes paid and profits.
Schauble, who testified before the EU Parliament’s Panama Papers investigative committee July 11, said public reporting of companies’ tax information would undermine international efforts such as the Organization for Economic Cooperation and Development’s reforms to curb tax base erosion and profit shifting (BEPS). Schaeuble also defended Germany’s resistance to EU lawmakers’ demands for public registries of beneficial owners of companies and trusts.
“Reducing tax evasion and tax avoidance is a global problem and it will take global efforts to resolve it,” Schaeuble said in response to questions from EU lawmakers. “I am of the view that it is no use to work to get global agreements and then not implement them.”
EU lawmakers, including Denmark’s Jeppe Kofod and Germany’s Sven Giegold, accused Germany of being the biggest obstacle in the Economic and Financial Affairs Council (ECOFIN) to the pending EU legislation calling for public country-by-country tax reporting by multinational companies with an annual turnover of 750 million euros ($855 million). The European Parliament approved a version of the legislation July 4 that would require any multinational company meeting the 750 million euro threshold and doing business in the EU to publicly disclose all profits and taxes paid on a country-by-country basis, even if the company is based outside the bloc.
However, the legislation, which was proposed by the European Commission in April 2016, has been blocked in the ECOFIN. Ireland—which has often been cited as a tax haven by groups such as Oxfam International because its low corporate rates have attracted large U.S. multinational companies—is another country taking the same line as Germany in opposing public country-by-country reporting for large multinationals.
New Irish Finance Minister Paschal Donohoe, speaking alongside Schaeuble, emphasized that the Irish government is committed to international efforts to reduce tax evasion by companies.
“The agreement of the OECD BEPS report was a very important step, and the focus must now be on implementation,” Donohoe said. “Ireland was one of the first countries in the world to introduce country-by-country reporting to tax authorities. We remain convinced that consistent global action is the best way to achieve a fair and transparent global tax system.”
EU lawmakers also grilled Schaeuble over Germany’s continued resistance to requiring all beneficial owners of companies and trusts be disclosed in public registries.
“The publication of this kind of information is the responsibility of the regions,” Schaeuble said. “Germany is a federation so it is not up to the federal government to decide this.”
Giegold criticized Schaeuble and the German government for pushing countries at the recent Group of 20 summit in Hamburg to make company beneficial ownership information available but then failing to support the effort in the EU.
Parliament’s Panama Papers investigative panel was set up following the April 2016 leaks that revealed hundreds of thousands of individuals hiding wealth via shell companies based in Panama. Donohoe said that in the wake of the Panama Papers, more than 2,500 Irish citizens have disclosed their use of offshore financial centers to hide wealth due to a “voluntary disclosure regime” that expired May 4.
“Irish Revenue are now examining in further detail all of the disclosures received,” Donohoe said.
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