Mandatory Reporting of Revenue and Taxes by Country for Multinational Corporations with EU Sales Exceeding 1 Trillion Won

[Photo by Reuters Yonhap News]

[Asia Economy Reporter Park Byung-hee] The European Union (EU) Parliament and member state governments have reached an agreement to prevent tax evasion by multinational corporations, Bloomberg reported on the 1st (local time).

According to the agreement, companies with global revenues exceeding 750 million euros (approximately 1.0156 trillion KRW) for two consecutive years must mandatorily report the scale of profits and tax payments by each EU member state. Multinational corporations must also report taxes paid in regions designated by the EU as tax havens. The EU has designated 19 regions as tax havens, placing Guam and the Virgin Islands on the blacklist, and Panama, Fiji, and Samoa on the grey list.

This agreement is expected to provide a basis to prevent tax evasion by multinational corporations. The EU Commission estimated that the scale of corporate tax evasion within the EU amounts to 50 to 70 billion euros annually.

However, there are also complaints about the agreement. Manon Aubry, a left-leaning Member of the European Parliament, pointed out that Switzerland, the Bahamas, and the Cayman Islands were excluded from the tax haven list. There were also complaints about the decision allowing companies to withhold sensitive information from disclosure for up to five years. Evelyn Regner, the European Parliament member who led the negotiations, said, "This agreement is only the beginning to secure tax justice and financial transparency."

Zven Zigold, a Member of the European Parliament from Germany’s Green Party, expressed dissatisfaction that the agreement applies only within the EU. While acknowledging it as a significant step forward, he emphasized the need to strive for similar measures worldwide.

In fact, the introduction of a global minimum corporate tax rate is being pursued as a worldwide standard, including by the United States. The Group of Seven (G7) is expected to agree on setting the global minimum corporate tax rate at 15% at the finance ministers’ meeting scheduled for April 4-5.

The EU agreement must receive majority approval in the European Parliament vote. After parliamentary approval, EU member states plan to pursue national legislation over the following 18 months. Additionally, EU member states will review and decide on amendments to the legislation every four years.

On the same day, the EU Commission also announced the launch of the so-called ‘EU Tax Observatory.’ The Commission stated that the Observatory will play a central role in collecting, researching, and analyzing tax-related data to assist countries in drafting tax-related legislation.

This content was produced with the assistance of AI translation services.