LONDON (Reuters) - Large European companies would have to reveal how much profit they make, subsidies received and taxes paid in each country they operate in under a draft law backed by EU lawmakers on Wednesday.
The aim of the draft law on shareholders’ rights is to encourage more transparency at companies on their tax affairs and to make investors more engaged with the companies they own.
The vote in Strasbourg sets the stage for final negotiations with the bloc’s member states on a text that would become binding.
However, more changes are expected to the controversial measure which opened up divisions between the bloc’s main left and right parties on Wednesday.
The draft law would help fight tax evasion and tax avoidance by ensuring that multinationals openly declare the taxes they pay in each country they operate in, said Sergio Cofferati, an Italian center-left member of the assembly.
The assembly’s largest party, the center right EPP, said country-by-country reporting was not part of the original draft law on shareholders’ rights and was too burdensome.
“I hope that a future compromise will not undermine the position of the European companies on the global markets,” said Tadeusz Zwiefka of the EPP party.
Lawmakers backed allowing shareholders to vote at least every three years on company directors’ pay, though it would be up to each member state whether the outcome would be binding.
Pay policy should also explain how it contributes to the long-term interest of the company and set clear criteria for awarding fixed pay and bonuses.
Reporting by Huw Jones; Editing by Keith Weir