Under the proposals, announced this afternoon by EU Financial Services Commissioner Jonathan Hill, all multinational companies with a turnover greater than €750m (£600m) would have to comply with higher levels of public disclosure.
Data, which would be made public on a country-by-country basis in each of the bloc's 28 member states, would include tax paid and tax accrued, profits, turnover, earnings and number of employees.
By using complicated tax arrangements, some multinationals can pay nearly a third less tax than companies that only operate in one country. Our proposal to increase transparency will help make companies more accountable. It will promote fairer competition between companies regardless of their size.
The information will remain available for five years, expected to be published on companies websites.
According to Hill this will affect around 6,500 businesses across the EU and 90 per cent of business revenues.
The Panama Papers revelations have renewed calls for multinational companies to pay their fair share and Lord Hill, the European commissioner in charge of financial services, said yesterday a new clause has been added to require the companies to say how much money they make in so-called tax havens.
However, this extension will only be implemented once the EU has adopted a so-called black list for tax havens.
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MPs have said companies like Google should lead by example in reforming international tax laws and the original proposals were drawn up after public outcry over large corporations, including Apple and Starbucks, paying little tax despite earning healthy profits.
Companies based outside of the EU would be required to publish a tax report if they have a subsidiary in an EU country.
The plans have already been criticised by campaigners and experts who say it will be toothless and business groups warning some multinationals could be put off operating in Europe altogether.
Ray Smith, Tax Partner at Clyde & Co, said:
The concern is, as with any populist reforms, that any new rules made in haste may overlook the fact that low tax jurisdictions often play an important and legitimate role in many investment and financing structures which EU businesses rely upon. If the rules are drawn too widely and applied indiscriminately they may increase, for little real gain, tax and regulatory compliance costs.
According to the European parliament the EU loses between €50bn and €70bn a year through corporate tax avoidance.
Before they can be brought in the plans will still have to be agreed by the majority of EU finance ministers and the European parliament.