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News : Innovation Last Updated: May 27, 2013 - 10:53 AM

EU to force country-by-country tax transparency on big companies
By Finfacts Team
May 24, 2013 - 7:30 AM

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Eric Schmidt, Google executive chairman, (c) speaking at the Google UK Big Tent event, Wednesday, May 22, 2013 

Big companies operating in the European Union (EU), beginning with banks, will be forced to provide breakdowns of tax paid country-by-country according to regulations being drafted by Michel Barnier, European commissioner for the internal market and financial services.

Barnier said in a speech in Amsterdam Thursday that rules which will compel banks to report their profits, taxes and subsidies by country from 2015 could be bought forward and will also now be extended to cover other companies.

The plan is a response to the international controversy about companies such as Apple, Amazon, Google, Microsoft, Facebook and Starbucks, using countries such as the Netherlands, Ireland and Luxembourg to avoid paying massive amounts of taxes.

Tim Cook, Apple's chief, was grilled about his company's use of Ireland as a tax haven by a US Senate panel in Washington DC on Tuesday. Meanwhile, Eric Schmidt, Google executive chairman, was back in the UK for a second straight week, to be hassled about his firm's massive tax avoidance, again using Ireland as a tax haven to route funds tax-free to Bermuda - - a tax haven with arching palms shading sandy beaches.

On Wednesday at the Google Big Tent event in the UK, Ed Miliband, Labour leader, used Google's original "letter from the founders" to argue that its tax structure - - "close" sales in Ireland, transfer money to the Netherlands, and then ship even more money to Bermuda, was short-term thinking, something that Larry Page and Sergey Brin had said they wouldn't do.

Charles Arthur of The Guardian writes: "A week or so ago, Google's chief executive, Larry Page, caused ripples when he suggested at a public event that laws older than 50 years or so shouldn't apply to Internet companies, and that it might be fun to have an island where Google could dabble in new ideas without all the silly meddling of governments. (That's only a slight paraphrase.) The only way he could have seemed more like a Bond villain would be if he had been stroking a cat while speaking."

Google must be surprised at the pasting its reputation is getting.

Also on Wednesday, at the EU summit in Brussels, Austria and Luxembourg joined in calls for the increased sharing of banking information. Until recently, the two countries have been  opposed to ending banking secrecy in their respective countries, blocking such reforms in previous meetings in the fear that it would harm their attractiveness as banking havens.

On Wednesday Austria and Luxembourg agreed to the plan after being given until the end of the year, allowing them more time for negotiations on ending banking secrecy in non-EU countries like Switzerland, Monaco and Liechtenstein.

"At a time of social pressure and social tension, fighting [tax evasion and tax fraud] is a matter of fairness and a matter of credibility," Herman Van Rompuy, EU council president, said. "There is a momentum not comparable with other moments in the past because we are in an economic crisis.

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