Brussels, 28/08/2015 (Agence Europe) - Public attention has fallen slightly when it comes to tackling tax evasion by multinational companies, but NGOs and employers are monitoring with some concern developments on this front in the European Union. We look here at the expectations of Oxfam, non-governmental organisations and BusinessEurope.
Following the 'Luxleaks' scandal about how multinationals are able to reduce their tax bill using 'tax rulings,' the European Commission suggested introducing automatic exchange of information about said rulings. It seems clear that the member states are trying to unravel the draft legislation, even though it is not up to scratch, explained Natalia Alonso, director of Oxfam's EU office, to this newsletter. Tamira Gunzburg, director of ONE's office in Brussels, says it can't be called transparency if it's just exchange so it's a tax package rather than a tax transparency package.
Both NGOs are calling for 'tax rulings' to be made public.
If there isn't full transparency about tax rulings, then at least the European Commission should be given a copy of the information exchanged between tax offices and pledge to open an investigation into possible abuse of state aid for any suspect cases, says Oxfam. The Commission's role in the exchange of information is one of the stumbling blocks in this technical and highly politicised dossier (see EUROPE 11369). The Luxembourg Presidency of the Council of the EU says it wants to facilitate agreement in principle at the Ecofin Council in October. The Commission defends its role, but it will end up being ringfenced.
Disagreements about country-by-country reporting of tax information. NGOs have expectations for another measure in the OECD's 'BEPS' project to counter tax evasion, namely country-by-country reporting of tax payments. The Commission is examining the idea of making such reporting public in a public consultation that ends at the beginning of September (see EUROPE 11354). If it decides to take this option, it would not go any further than the OECD, which suggests country-by-country reporting only to tax offices.
“We support great openness in term of transparency, getting balance right, if we put forward new regulation, it should enable companies to rightly protect commercially sensitive information, and limit administrative burdens,” explained James Watson, director of economic affairs at BusinessEurope. European employers are unhappy that the European Parliament has been able to include this measure in the review of the shareholders' rights directive. In July, BusinessEurope explained that such a requirement would create a disproportionate burden on companies and send the wrong signal at a time when stock markets have lost 6,000 companies in six years, due to the cost of complying with existing legislation.
ONE wants the Luxembourg Presidency to stop dragging its feet and launch trialogue negotiations between the EP and Council on shareholders' rights. The NGO says it is not realistic to expect that with the public consultation, the Commission will unveil legislation specifically on country-by-country reporting in October.
At the Council, Germany and France call for reporting solely to tax offices. French finance minister Michel Sapin says it would be difficult for the EU to apply public reporting if the United States opposes it (see EUROPE 11301). BusinessEurope is concerned too about the EU going it alone.
Gunzburg says work has to start somewhere and the OECD rules should be seen as the minimum acceptable level. Gunzburg hopes that publicly quoted companies will one day want to encourage their peers in the United States to follow suit.
Convergence over CCCTB. There is a point on which the NGOs and BusinessEurope agree and that is that it should be possible to consolidate tax bases via the draft legislation on a common consolidated company tax base (CCCTB) expected for 2016. Alonso says that without the consolidation of tax bases, there is the danger of giving companies the best of both worlds and giving new loopholes to those that wish to avoid paying tax (see EUROPE 11365). Watson says he is very concerned about the fact that the European Commission has decided to postpone this aspect of CCCTB that is one of the main stumbling blocks in the talks between the member states at the Council of Ministers. Watson says there are measures planned for the short-term that would make partial consolidation possible, but that this would be “rather complicated.” Going by past experience, he fears that if consolidation is divided into two stages, then one would never arrive at the second stage. BusinessEurope is not very enthusiastic about the fact that the Commission is considering making CCCTB compulsory rather than optional. Watson points out that the common combined tax base must not be used to harmonise rates of company taxation. The Commission says that this certainly isn't what it is planning. (Elodie Lamer)