Let’s not overreact to Panama Papers, many EU finmins warn

Reuters:  A European Commission plan to publicly reveal tax and financial data of large companies raised concerns among many European Union finance ministers who on Saturday advised caution after the Panama Paper leaks.

Under pressure after the revelations about offshore firms hiding wealth, the EU executive proposed on 12 April a plan to increase tax transparency of multinational companies, including public disclosure of their activities in tax havens.

Companies have warned of reputation risks, as some data may be misinterpreted if made publicly available. Non-EU firms could also acquire valuable information on their EU competitors, damaging their competitiveness, trade associations said.

German Finance Minister Wolfgang Schaeuble questioned the effectiveness of the Commission’s plan at the end of a two-day finance ministers meeting in Amsterdam and indicated German federal states opposed public disclosure of companies’ tax data.

“Many people and entities are more willing to share information when they do not have to fear the effect of a public pillory,” he said, backing disclosure only to tax authorities.

“We should not overreact,” his Maltese counterpart Edward Scicluna said, warning against the competitive risks for EU companies if overly strict transparency regulations were adopted.

“We would prefer that as a first step, (corporate tax data) should be available to tax authorities, not to the public.”

Belgian Finance Minister Johan Van Overtveldt said the ministers “have to be careful about privacy rights.”

Taking note of the “different views” among ministers, Dutch Finance Minister Jeroen Dijsselbloem said that the topic will be formally addressed at a new meeting during his country’s presidency of the EU in this first half of the year.

He conceded that talks would have to continue beyond the summer to reach a possible compromise on the subject.

The EU draft rules would require firms with an annual turnover above 750 million euros to publicly disclose their tax data in all EU countries where they operate.

With a last-minute tweak, the Commission extended this new disclosure requirement to corporations’ activities in so-called tax havens, jurisdictions that facilitate companies and individuals to hide their taxable income.

The European Commission, the EU’s executive arm, had initially proposed in January that companies’ detailed tax data should be available to tax administrations in each EU country, but not to the wider public.

Anti-corruption campaigners have urged the EU do to more than that proposed so far, extending public disclosures to all countries and to more companies.