February 1, 2023

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New EU law to prevent multinational companies tax evasion |  Economie

New EU law to prevent multinational companies tax evasion | Economie

The European Parliament has finally approved a law requiring multinational companies to disclose how much tax they pay in each EU country. The new directive aims to prevent companies from evading taxes. These are companies with an annual income of more than 750 million euros.




It took five years of negotiations between the European Commission, member states and the EU Parliament before the law could be passed. Large corporations and their subsidiaries operating in more than one EU country must submit reports for each country on the nature of business activities, number of full-time employees, net sales, amount of tax attributed and paid, and accrued profits.

European Parliament Member Paul Tang (PvdA), chair of the EU Parliament’s Tax Committee, has long advocated this law. “Tax-evading advisors and multinational corporations know they are wrong,” he says. The risk of reputational damage will force them to look at tax payments in a different way. Not as a cost, but as a result of their success, and an opportunity to contribute to society.”

“Apple paid 0.005 per cent profit tax, Google 0.02 and Shell even nothing at all. This is unacceptable, but it was only revealed after great public pressure, a lengthy investigation or a leak.” With this law, every company must show how much tax it pays in the countries in which it operates. This way you can see at a glance which company is making a mistake.”

Member states have eighteen months to convert the European directive into national law.