Brussels, 05/02/2016 (Agence Europe) - If civil society and the European Parliament are not disappointed at what the European Commission draws from its hat in April on country-by-country tax reporting, they are likely to be unhappy with what the Council of Ministers does with the draft legislation.
A European Commission impact assessment is looking at whether a level playing field and confidential business information can be provided and whether such a move would have any value-added. People at the Commission point out that it is not the public that is demanding that companies pay their taxes, but tax offices, which will have access to the country-by-country reporting information under the OECD rules. The Commission has already proposed to introduce it in the form of amendments to the Administrative Cooperation Directive 2011/16/EU. Public reporting would just reveal the most obvious cases, they explain
Tired of the argument that transparency would have a negative impact on company competitiveness, civil society is planning to publish a research document in March on the subject, ahead of the Commission's impact assessment. In a press release accompanying the anti-tax fraud package of 28 January, the Commission said it would unveil legislation in the spring once the impact assessment had been completed. Off the record, sources explain that it has not yet been decided whether the initiative would take the form of draft legislation.
Although he is not responsible for this issue, Taxation Commissioner Pierre Moscovici explained that the impact assessment by his colleague, Jonathan Hill, would decide whether the Commission would go further than the OECD on the question of publicity or whether the EU would set up a labelling system (see EUROPE 11466). Moscovici said the question was the extent to which companies should publish information. The labelling system could include voluntary public reporting, but the Commission does not seem to be ruling out more ambitious measures at this stage. It is said at the Commission that the reporting requirements for banks under prudential legislation are a source of inspiration and the idea of making it compulsory to publish some types of information is another possible area.
The Eurodad NGO urges the European Commission to support the European Parliament's proposal for public country-by-country reporting as part of the Shareholders' Rights Directive (2007/36/EC). It seems unlikely that the Commission will follow this approach, because it seems to be aware that the member states are not keen on this directive and would therefore not be unhappy for the Parliament to put a brake on the talks if it is ignored on the question of reporting. The Parliament wants companies with a turnover of over €40 million to be subject to public reporting rules, compared with the OECD's €750 million for reporting to tax offices. It is this threshold that the Commission has kept in its draft amendment to the administrative cooperation directive. At the Commission, people say that there needs to be coherence among the various items of draft legislation.
Another important issue will be what the member states will make of the proposals when they have them. Recent comments by the British Chancellor of the Exchequer, George Osborne, are to be handled carefully. He says he is in favour of the OECD's public reporting. At EU level, the British Conservatives back confidential reporting, but will carefully examine Jonathan Hill's proposals. In France, the attempts to introduce public reporting failed at the National Assembly. The member states are reported to be not keen on these taxation issues being processed using co-decision without the unanimous voting requirements.
Several delegations said they fear that the United States and Japan will decide to not implement the OECD's reporting rules if the EU moves in the direction of public reporting. The OECD itself has asked the Commission to avoid undermining the OECD's agreement and warned the Commission at the end of September that Brazil and the US might have obstacles in their constitutions to allowing their companies to participate in public reporting in the EU. At a fiscal conference organised by the European Banking Federation earlier this week, a participant commented that the US was not one of the 31 signatories to the OECD reporting model at the end of January. The OECD says this is not a fundamental problem.
It therefore remains to be seen, should the Commission decide to make the leap, whether the member states will then contradict it. (Original version in French by Elodie Lamer)