The European Parliament will vote next week on a report co-authored by a Labour MEP that proposes a strengthening of recent efforts to clampdown on aggressive tax avoidance and tax evasion.
The new comprehensive legislative report will make concrete recommendations that must be adopted into legislative proposals by the European Commission within one year. If the Commissioner responsible fails to do so, they must explain the reasons why in an appearance before MEPs.
One major highlight of the report is mandatory, public country-by-country reporting of tax arrangements, meaning all companies that operate across borders must publicly report on where they make their profits and where they pay their taxes.
As part of efforts to bring more people forward as whistle-blowers - as happened in the Lux Leaks scandal - the report also introduces better protection for those who report misconduct or illegal activity to the authorities or the public.
Companies that try to use tax havens to hide their profits or shift their tax will also face tough new sanctions, and a common definition of tax havens will be introduced across the EU - those firms that use them will be prevented from accessing any EU money, including Common Agricultural Policy funds.
Anneliese Dodds MEP, member of the European Parliament economic and monetary affairs committee, and co-author of the report, said:
"This report shows the determination of both the European Parliament and the people of Europe to see real legislative change to stop tax dodging by big multinational firms. By introducing laws at EU level, we can prevent companies jumping across borders to reduce their tax bills to almost zero.
"The Lux Leaks scandal last year showed how much these corporations have been getting away with dodging tax that could have been used to build schools, hospitals or pay down the national debt.
"By offering greater protection for whistle-blowers and forcing companies to make public exactly how much profit they make and where they pay it we can see tax justice begin in earnest.”
Neena Gill MEP, member of the European Parliament economic and monetary affairs committee, added:
"This report is an important step in setting the tax agenda for the European Union and closing loopholes that multinational companies have been able to exploit by playing one country against another.
"We need a fairer taxation system that means citizens no longer foot the bill for the corporate sector - tackling tax fraud and tax evasion needs to be a priority for all EU national governments as companies will always find ways to pay the least tax."