Multinational companies could be forced to reveal far more about their finances in the Global South following a European Commission decision welcomed by Christian Aid.
The Commission this week launched a public consultation on the introduction of new rules that would force multinationals to reveal more information than at present, including the profits they make and the taxes they pay in every country where they operate.
Christian Aid say that the information would help poorer countries to crack down on the tax dodging, which currently costs them more than they receive in aid.
The move was described as “hugely exciting” by David McNair, Christian Aid's Senior Economic Justice Advisor.
“If the new rules are introduced, then poorer countries will at last have more of the information they need to crack down on the unscrupulous multinationals which hide their profits in order to lower their tax bills,” he insisted.
McNair explained, “At present, some companies simply shift their profits into tax havens and conceal what they are doing, for instance through exaggerated claims about the costs they have incurred in developing countries”.
He added, “This deprives those countries of revenue which they desperately need in order to build schools, hospitals, roads and other public services which we take for granted. People living in poverty are the ones who suffer the consequences.”
That the Commission is now considering the introduction of a new accounting standard for multinationals is a major victory for Christian Aid, the Tax Justice Network and campaigning accountant Richard Murphy who created the concept of country-by-country reporting.
Christian Aid has long argued for country-by-country reporting – the new accounting standard which the European Commission is now considering.
International organisations such as the Organisation for Economic Co-operation and Development (OECD) recognise that tax dodging is likely to cost countries in the Global South more than the total that they receive in aid in each year. Christian Aid estimates that their annual loss may be as great as $160 billion.