Brussels, 05/04/2016 (Agence Europe) - In a letter dated Tuesday 5 April to the President of the European Commission, Jean-Claude Juncker, in response to the 'Panama Papers' revelations, some 50 civil society organisations and unions have expressed their concerns regarding the shortcomings of the forthcoming Commission proposal on the publication of accounting information for taxation purposes by major European businesses.
This coalition of organisations and unions argues that the draft directive - as leaked in the media in late March (EUROPE 11516) - “contains several worrying elements”. It calls upon the European Commission to change the draft: solely intra-European country-by-country reporting is “unfit for purpose”. Only country-by-country reporting which also includes all third countries would allow for “real transparency on profits made on taxes paid by multinationals”, it states.
Indeed, the organisations argue, the system the Commission is to propose - solely intra-European country-by-country reporting - “would not prevent multinationals from continuing to shift their profits out of the EU”. Furthermore, the coalition adds that the “developing countries would be unable to have specific information for each country”. This situation would not only undermine any chances of collecting adequate public revenues, it would also be contrary to the EU's commitment to policy coherence for development.
The second reason for the draft's inadequacy regards the threshold above which European businesses would be covered by the future rules. Setting the threshold for companies to be covered by the reporting requirement at an annual turnover above €750 million would, “according to the OECD's estimates, exclude 85-90% of multinationals from the reporting requirement”, the coalition stresses. It adds that a lower threshold would cover more companies, “providing more data on the activities of multinationals and ensuring a more level playing field”.
Thirdly, total transparency of accounting information would give a clear picture of whether taxes are paid where profits are generated. However, “the Commission's current proposal leaves out many important elements such as assets, sales and a full list of subsidiaries”, the organisations lament.
The fact that tax scandals involving European companies are increasing in number, the latest being the 'Panama Papers' (EUROPE 11524), should push the Commission to “restore public trust in our tax systems and to take concrete steps to fight extreme inequality and poverty both at home and in developing countries”, the coalition states.
As regards 'Panama Papers', many civil organisations expressed their anger. They all condemn the fraudulent practices of multinationals and deplore the current legislation which they argue “has proved that it is entirely incapable of taking action against multinationals and wealthy individuals who refuse to pay their fair share whilst ordinary citizens and public services continue to suffer under government-imposed austerity cuts”.
The European Federation of Public Services Unions (EPSU) calls for the end of tax avoidance and a ban on tax havens. They argue that the 'Panama Papers' provide “new insight into the shocking extent of global tax avoidance by the rich and powerful”.
Transparency International EU calls the public registers of companies' beneficial owners to prevent multinationals from hiding their assets inshell companies or trusts. “Nothing short of public transparency about corporate ownership can stop the rot”, says Carl Dolan, the director of Transparency International EU. He adds that “the EU must step of its efforts to put pressure on third countries to reveal beneficial ownership information”.
Oxfam, for its part, states that “all governments, rich and poor, must work to end tax haven abuse, because it is their citizens - their electorate - who are the biggest losers”. The OMG calls on “governments to penalise banks and any others who facilitate tax dodging”.
Finally, Eurodad (the European Network on Debt and Development) states that if countries brought in registers which would allow the public to see who owns the businesses operating in our societies “it would make it impossible to set up fake companies to hide dirty money”. (Original version in French by Maëlle Didion, intern)