Companies could be required to disclose taxes they pay in every country where they operate

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The EU has launched a public consultation on corporate tax transparency. This aim to establish whether requiring companies to disclose more information about the taxes they pay could help tackle tax avoidance and aggressive tax practices in the EU. Companies could, for instance, be required to disclose the taxes they pay in every country in which they operate.

The consultation is part of the Action Plan for Fair and Efficient Corporate Taxation, which aims to reform corporate taxation in the EU.

The proposals contained in the consultation follow through on the commitments by the G20 to ensure that tax authorities freely exchange information about large multinationals, including their country-by-country reporting. 

Some companies generate large profits in the Single Market, but pay little or no tax in the EU. Some multinationals use aggressive tax planning, national mismatches and legal loopholes owing to their presence in multiple jurisdictions. Their use of complex corporate structures often puts small- and medium-enterprises at a disadvantage. It may also distort competition, put smaller rivals at a disadvantage and pit EU and non-EU companies within the Single Market against each other. 

Transparency requirements currently exist for banks under the Capital Requirement Directive IV and for large extractive and logging industries under the Accounting Directive, in the form of country-by-country reporting. The consultation aims to assess whether extending such public disclosure obligations to multinationals in other sectors could help address tax avoidance.

The consultation closes on 9 September.