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Let's not overreact to Panama Papers, some EU finance ministers warn

As the EU reels from the Panama Papers scandal, the bloc's finance ministers are in disagreement. The issue is whether to force large multinational companies into making information about their profits and taxes public.

The finances of numerous politicians, sports stars and celebrities were called into question last month following the massive leak of confidential documents detailing the funneling of money to shell company tax havens from the Panama-based law firm, Mossack Fonseca.

In response to the disclosure of thousands of documents, the European Commission proposed that any multinational with annual global revenues exceeding 750 million euros ($842 million) with operations within the European Union should be required to publish country-by-country data on their website detailing their profits and where they pay their taxes.

Companies have warned of reputation risks, as some information may be misinterpreted if made available publically. Non-EU firms could also obtain valuable information on their bloc competitors, tainting competiveness, trade associations warn.

Germany’s Finance Minister, Wolfgang Schäuble, questioned the effectiveness of the plan at the conclusion of the two-day finance ministers meeting in Amsterdam Saturday, indicating that German federal states would be opposed to company tax data being made public.

"Many people and entities are more willing to share information when they do not have to fear the effect of a public pillory," Schäuble warned, backing disclosure only to tax authorities.

"We should not overact," Malta's Finance Minister, Edward Scicluna, added, cautioning against the competitive risks for EU companies if such stringent regulations were adopted.

"We would prefer that as a first step, (corporate tax data) should be available to tax authorities, not to the public."

His Belgian counterpart, Johan Van Overtverld, said ministers "have to be careful about privacy rights."

Dutch Foreign Minister Jeroen Dijsselbloem noted the "different views" amongst ministers, adding that the topic will be formally addressed at a new meeting during his country’s presidency of the EU in this first half of the year.

Talks, Diksselbloem added, would need to continue beyond the northern hemisphere summer in order to reach a possible compromise.

The commission estimates that the proposed measures would affect around 6,500 businesses. For the plan to take effect, approval of EU member states and the backing of the European parliament is required.

jlw/rc (AP, AFP, Reuters, dpa)

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