Brussels, 22/03/2016 (Agence Europe) - On Monday 21 March, civil society made an attempt to bring pressure to bear on the Commission to change its proposal for public country-by-country reporting before it is announced on 12 April.
The draft proposal, of which EUROPE has seen a copy on Monday, would require large businesses to publish their accounting data for the EU on country-by-country basis (turnover, tax paid, etc.), but only global figures for the rest of the world (see EUROPE 11510 and 11516).
“It would mean that multinational corporations could still hide their profits and avoid taxes as long as they use tax havens”, commented Tove Maria Ryding, of the network Eurodad.
Richard Murphy, a founder member of the 'Tax Justice Network', said that it will not be country-by-country reporting. “It is EU zone reporting at best”, he blogged. “It fails the demand made by the Parliament of the Commission”, he continued. Ryding points out that it is not too late for the Commission to “come to its senses and produce a proposal that actually allows the public to see what multinational corporations pay in taxes”.
Over at the Commission, however, the proposal seems to have been the subject of mature reflection. “It is the maximum possible”, keeping a cost/benefit balance, a source explained, adding that there had been considerable criticism from the member states as the proposal already goes beyond the OECD framework. At the Commission, a consensual debate is anticipated from the college of commissioners on 12 April. “Nobody in this building will support this approach”, the source explained, when asked about the possibility that the Commission might review its copy following the criticisms of the NGOs. “It's the absolute most we can do at the moment”, the source added. It has also been confirmed that there was indeed a “concern” that the United States would cease exchanging information in the framework of the OECD's country-by-country reporting, in which the information is not published, but sent to the tax administrations and exchanged between the various jurisdictions. On 10 March, the American deputy Secretary to the Treasury with responsibility for international tax affairs, Robert Stack, who decided to publish this information. The member states and the Commission stressed that the information exchanged in this framework would not be published. The Commission takes the view that the forthcoming proposal on public reporting is an entirely separate animal.
When asked about the difference between these requirements and similar ones on banks, which are subject to a public country-by-country reporting obligation that is not limited to the EU, sources in the European institution stressed that this covers only European banks, whereas in the framework of the forthcoming proposal, all companies active in the EU would be included in the scope of application, irrespective of whether they are established in the EU or in a third country. It was also explained that the 'business model' of banks is the same everywhere, which is not the case with other sectors. Jean-Charles Balat of Crédit Agricole told the special TAXE II committee of the European Parliament on Monday evening that he understood that a number of sectors were concerned by problems regarding their commercial interests in the framework of this public reporting. He said that he understood that the “issues are different”, but as far as banks are concerned, they have not encountered problems of this kind, he said.
The information published in the framework of the new future amendments to the 'accounting standards' directive (2016/34/EU) will furthermore be the same as those imposed on the banks, with the exception of public subsidies, the main objective being to see whether the tax is paid where the economic substance is created, a Commission source went on to explain.
Although the member states, primarily Germany, have misgivings about this public reporting, the source added that they could not afford to block the proposal. France has incidentally recently announced that it would support public reporting at European level, whilst previously it had expressed concerns about moving forward unless the United States were also going down this road. Mindsets seem to be changing, in civil society as well as within the Commission.
Nor is this proposal exactly what the EP was anticipating, as it would have preferred the Commission to support it in its attempts to push through the public reporting requirement in the framework of the current negotiations on the 'shareholders' rights' directive. A Commission source said that taking this text hostage for public reporting would be “questionable”.
As regards the threshold of €750 million, which the OECD states would concern only around 10 to 15% of multinationals, the Commission source explained that it is mainly the largest companies which can afford to pay tax consultants to make use of tax loopholes. (Original version in French by Elodie Lamer)