Brussels, 08/04/2016 (Agence Europe) - The European Commission has decided to toughen its proposed public country-by-country reporting specifically in order to target tax havens, following the Panama Papers scandal which shed light on the scale of the phenomenon of hiding tax assets via offshore finance.
Readers may recall that the initial draft proposal (see EUROPE 11510) provided for companies with European activities and a consolidated turnover of at least €750 million to publish certain accounting information (profits, tax paid, etc) on a country-by-country basis for the EU and aggregated data for the rest of the world.
According to a source close to the dossier at the Commission, two changes are likely to be made to this proposal. A specific clause is to be included to require businesses which have subsidiaries in tax havens not to limit the country-by-country breakdown to EU states. The second modification will aim to establish criteria to define tax havens and possibly also possible sanctions. Although the proposal, which will be made in the form of amendments to the directive on accounting standards, comes under the remit of the Competitiveness Council, the criteria for tax havens will be entrusted to the Council working group on taxation issues. The Commission has therefore stolen a march on the Ecofin Council, which is expected to publish conclusions in June laying down guidelines for this list.
Draft conclusions on the non-legislative part of the anti-tax avoidance package of the Commission (which includes the Commission's communication on tax havens) was ready on Thursday 7 April for discussions at technical level at the Council of Friday 15 April, but this has been withdrawn from the agenda at the last minute, as the Dutch Presidency states that it would rather hold a general debate on Panama Papers first.
That morning, the European employers, represented by BusinessEurope, positioned itself absolutely against this forthcoming proposal. Markus J. Beyrer, the director general of BusinessEurope, said that Panama Papers concerned individuals hiding their fortunes rather than corporate tax evasion. Beyrer that this debate might be more useful at international level in order to catch up with the work already completed on aggressive corporate tax planning. He also said that this publication would not facilitate the debate, given the high risk of misguided interpretation, as only tax experts are truly able to understand the information in question. This is not “good policy-making”, said Beyrer, who pointed out that the ink is not yet dry on reporting to the tax administrations, on which an agreement was reached in March at the Ecofin Council. The right thing to do would have been to judge its implementation before deciding whether it is necessary to go further. The employers' association also argues that it is the tax administrations which need this information and that they would automatically have it through the agreement on this dossier. Lastly, its final argument is that publishing the information will harm the competitiveness of European businesses and the attractiveness of the EU as a destination for investments. BusinessEurope has put the same point to Pierre Moscovici, Commissioner for Taxation, who it has sent a position paper (see EUROPE 11511).
The Commissioner responded to these concerns on 6 April, in a letter of which EUROPE has had sight: “We have put huge effort into finding the right balance between providing a high degree of public transparency on corporations' tax practices - which is necessary to restore confidence - and protecting the competitive interests of EU companies. I am confident that the upcoming proposal will achieve these aims”. The proposal will be presented in Strasbourg at 3 p.m. on 12 April.
The Commission also intends to review the money laundering directive in order to modify the provisions on access to the central registers of the ultimate owners of businesses, in order to make it easier for tax administrations to conduct investigations. (Original version in French by Elodie Lamer)