World

EU Commissioner: Panama Papers Show Need For Transparency

11/01/2016_Margrethe Vestager
European Competition Commissioner Margrethe Vestager in Brussels, Belgium, January 11, 2016. Vestager said more must be done to boost tax transparency. Francois Lenoir/Reuters

The EU’s Competition Commissioner has called on European countries to consider disclosing more information about the amount of tax companies pay within them.

Speaking to Newsweek in the wake of the Panama Papers leaks, which exposed widespread use of offshore tax havens by global elites, Margrethe Vestager said the “momentum” created by the scandal should be used to “get the international community united in fighting tax avoidance.”

Vestager said that one priority was to ensure “much more transparency—where do people generate their profits, where are these profits actually taxed?”

“My home country Denmark has made public lists of taxes being paid by big companies in order to increase their transparency which has been controversial, but it works and it’s a good idea,” she said.

In 2012, Denmark’s center-left government introduced a system of “open tax lists” for companies, revealing corporate tax records for the previous two years for firms liable for tax in Denmark.

The Tax Justice Network’s financial secrecy index report said that the move had “contributed to increased transparency” despite “strong corporate resistance, with some commentators comparing the open tax lists to a public pillory and predicting it may hurt investment in Denmark.”

Vestager said that the European Commission would shortly be publishing a proposal on transparency and country-by-country reporting of tax, but could not give further details.

The Financial Times reported in March that this would require multinationals with annual turnover of more than 750 million euros ($856 million) to publish information about the taxes they pay and profits they make in individual countries each year on their websites.

Editor's Pick