EU shelves plan to shine light on tax paid by multinationals

* New corporate transparency rules will not include tax measures

* Germany and Britain blocked reform, says MEP (Shenzhen: 000993.SZ - news)

By John O'Donnell

BRUSSELS, Feb 26 (Reuters) - Plans to make companies reveal how much tax they pay country by country were abandoned on Wednesday, knocking back the efforts of lawmakers who had pushed to curb tax avoidance by multinational businesses.

Schemes used by Starbucks (Berlin: SRB.BE - news) , Apple (NasdaqGS: AAPL - news) , Amazon and other corporations operating within the law to minimise their tax burden prompted heated public debate last year and a pledge by British Prime Minister David Cameron and others to tackle the issue.

The matter has since dropped off the political agenda and lawmakers from the European Parliament and EU countries on Wednesday shelved proposals to toughen new transparency rules by forcing big companies to disclose how much tax they pay in each of the countries where they have operations.

Instead, the rules due to be in place by 2016 will be limited to disclosure of company policies concerning, among other things, the environment, respect for human rights and management diversity. Even here, companies can keep information secret if it is deemed sensitive.

Germany and Britain led the push to limit the new law, said Arlene McCarthy, an influential European Parliament member who helped to push through rules to rein in banker bonuses.

"Member states talk a good story about wanting more transparency for multinationals. But when it comes to putting their money where their mouth is, they don't want strong rules," she said.

"The member states killed this. They are protecting the activity of big industry. The Germans and the British were vehemently opposed."

One British diplomat, who asked not to be named, defended his country's stance by pointing out that measures to set new standards for companies are already being considered by the Organisation for Economic Cooperation and Development.

Michel Barnier, the European commissioner in charge of regulation, expressed his disappointment but said that he hoped the tax issue could be taken forward at a later date.

(Editing by David Goodman)