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EU leaders reach agreement on ‘tax transparency’

EU leaders have agreed to support the automatic exchange of information between the tax authorities of member states, in order increase transparency in the tax system.

In addition, it has also been agreed that information about who owns and controls individual companies should be shared between countries.

Prime Minister David Cameron has described the agreement as a ‘turning point in breaking down corporate secrecy’, adding, ‘You can’t do it on your own. You have to have that international action’.

The news follows recent criticism by Labour leader Ed Miliband of the ‘extraordinary lengths’ taken by Google to avoid paying corporation tax in the UK, which resulted in the company paying £6m in tax on sales of £3.2bn.

However, Eric Schmidt, executive chairman at Google, argued that the responsibility for setting tax policy rests with governments.

‘All of us are operating in a very, very longstanding tax regime which was set up for various reasons that don’t necessarily make sense to me or anyone else. But they are the way the global tax regime works’, he commented.