LUXEMBOURG (REUTERS) - Anti-corruption activists and lawmakers have renewed their criticism of a planned EU law on tax avoidance, saying it would still not stop companies hiding their activities in tax havens outside the European Union.
Pressure on the European Commission to amend the draft that it is due to present next week has grown since the leak of more than 11.5 million documents from Panama-based firm Mossack Fonseca, exposing how politicians and businessmen use shell companies in tax havens to reduce their taxes.
The draft, posted by advocacy group Transparency International on its website, would oblige EU multinationals to publicly disclose tax and financial data for every EU country in which they operate.
But it would not require them to reveal country-by-country information for their activities outside the bloc, for which only "aggregated" information would be required.
"You can't have 28 reports for the EU and one report for the rest of the world," Transparency International said in a statement. "It defeats the purpose of this legislation and means that companies will still be able to use tax havens."
It called for mandatory public registers of companies'beneficial owners to make it harder to hide stolen assets in secret companies and trusts.
The Commission's draft would only apply to companies with an annual turnover of at least 750 million euros (S$1.15 million), a threshold meant to avoid imposing unnecessary costs on smaller firms.
"The proposed measures would cover too few companies,"advocacy group Oxfam said in a statement, adding that the bill"makes us wonder if the European Commission is really willing to put an end to tax dodging."
The Commission says it conducted an impact assessment to ensure the legislation would increase tax transparency without harming the global competitiveness of EU companies.
A spokeswoman said the plan was "balanced" and the result of"carefully weighing the objectives, benefits, risks and safeguards of any actions involved".
Foreign corporations operating in the European Union would also be obliged to disclose their tax data, or face fines.
The European Parliament approved a draft law on shareholders' rights last July, requiring the country-by-country disclosure of companies' tax data wherever they operate, but it is currently being blocked by EU member states.
The leak of the Panama Papers "shows even more clearly the need to quickly intervene to ensure transparency", said Sergio Cofferati, the Italian centre-left lawmaker who led the European Parliament's work on the shareholders' rights directive.
Other members of the EU parliament, from centre-left and leftist groups, called for tougher anti-tax avoidance measures, beyond the Commission's draft and what it has already proposed.
Earlier this year, the Commission proposed laws requiring the automatic exchange of tax data among EU states and setting stricter rules to reduce tax avoidance by multinationals, which, according to a study by the European Parliament, cost the bloc between 50 billion and 70 billion euros a year in lost revenue.
