The European Parliament approved new rules for the financial reporting for large international companies operating in the EU. Now Apple, Google and other multinational corporations will have to disclose information about the kind of profit they receive in each European country for more equitable taxation.
In accordance with the new reporting rules “country-by-country” to report on its operations in each EU country will be required of the company receiving an annual revenue of at least €750 million.
Now the Corporation serves the General report, which gives them the opportunity to pay taxes according to the legislation of those States where taxes are lower. This income is simply transferred from one country to another. That is, in fact, Apple, Google and other companies are using schemes of tax evasion. According to the Vice-President of the European Commission Valdis Dombrovskis, EU countries annually lose from such corporations from 50 to 70 billion euros.
EU authorities are concerned with improvement of tax legislation in respect of large corporations after a series of scandals involving Apple, Google, Starbucks etc.
Earlier, the EC launched an investigation in respect of the governments of Ireland, the Netherlands and Luxembourg in connection with a preferential tax regime, which was used in their territories by some international Corporation, conducted its European revenues through a branch, registered in some European countries with a preferential tax regime. Last year, for this reason, the iPhone maker was ordered to pay Irish authorities back taxes in the amount of €13 billion.
Irish tax legislation for several years, allowed Apple to pay a tax of 1% and then 0.005% of the profits. The corporate tax rate on profits in Ireland is 12.5%. However, the characteristics of the local adjustments allowed Apple to transfer the revenues of the Irish branch at the head office, existing only on paper. In the end, the money is not taxed in any country.
Two years ago the European Commission launched “a public consultation process on transparency of the corporate tax law” — in the end, this has resulted in changes in reporting that yesterday and endorsed the European Parliament. Now the changes must be approved by the parliaments and governments of EU countries.