The EU took another step towards requiring country-by-country reporting of banks’ taxes and profits yesterday after finance ministers meeting in Brussels ‘broadly endorsed’ a package outlined last week to amend EU rules on capital requirements and transparency.
The ‘CRD IV’ package includes new reporting requirements for banks on a country-by-country basis as well as the restriction of bankers’ bonuses. The Council of the European Union has now authorised further negotiations with the Parliament on outstanding technical issues, with a view to reaching a ‘final deal’ late this month. Adoption of the package requires ‘a qualified majority in the Council, in agreement with the Parliament’.
The Financial Times reported: ‘Given the near-unanimous backing for the compromise deal brokered with the European Parliament, the law could be signed off in coming weeks without another debate between finance ministers.’
Impact assessment
The CRD IV package will turn into EU law a comprehensive set of international standards known as the Basel III agreement, the Council said. Institutions will be required from January 2014 to make public the number of employees per institution in the group and net banking income.
‘At the same time, all European [systemically important institutions] have to report to the [European Commission] on profits made, taxes paid and subsidies received. During 2014, the European supervisory authorities will help the Commission to analyse this data and conduct an assessment looking at the economic impact (ie. competitiveness, credit availability and levels of investment) and broader financial stability implications of their potential disclosure.
‘From 2015, banks would have to publicly disclose the data unless the Commission, by delegated act, either delays or amends the relevant provisions. A "sunset" clause provides for expiry of this provision, if/when it has been dealt with in other forthcoming legislation (ie. accounting directive).’
How leading banks responded to an MP’s invitation to back tax transparency
Stephen McPartland, the Conservative MP for Stevenage, wrote last autumn to the chief executives of all the FTSE 100 companies, asking them to support a new international accountancy standard for country-by-country reporting. McPartland has published the responses on his website.
Antony Jenkins, group chief executive at Barclays, told McPartland that the transparency of the bank’s disclosures had been recognised in the Building Public Trust awards. Barclays received a ‘highly commended’ award for its tax reporting in 2010/11, he said. The annual Building Public Trust awards are presented by PwC.
Jenkins said Barclays would need to consider carefully any proposal to establish a new international accounting standard with the level of detail McPartland had suggested. Lack of uniformity of accounting standards and tax rules presented a ‘real risk’ that such a proposal ‘may add confusion to readers, rather than clarity’.
Iain Mackay, group finance director at HSBC, said the group’s annual report ‘already contains a significant amount of country-by-country information’. He added: ‘I would sound a note of caution about requiring more detail through a new accounting standard – as things stand our annual report and accounts already run to well over 400 pages of disclosures. However, we would support any initiative that would increase country-by-country tax transparency as part of our sustainability reporting.’
Sarah Prior, group tax director at Lloyds Banking Group, said country-by-country reporting was not a matter that was ‘particularly in point’ for the group, which is ‘a UK centric organisation with a considerably reduced overseas presence’.
The EU took another step towards requiring country-by-country reporting of banks’ taxes and profits yesterday after finance ministers meeting in Brussels ‘broadly endorsed’ a package outlined last week to amend EU rules on capital requirements and transparency.
The ‘CRD IV’ package includes new reporting requirements for banks on a country-by-country basis as well as the restriction of bankers’ bonuses. The Council of the European Union has now authorised further negotiations with the Parliament on outstanding technical issues, with a view to reaching a ‘final deal’ late this month. Adoption of the package requires ‘a qualified majority in the Council, in agreement with the Parliament’.
The Financial Times reported: ‘Given the near-unanimous backing for the compromise deal brokered with the European Parliament, the law could be signed off in coming weeks without another debate between finance ministers.’
Impact assessment
The CRD IV package will turn into EU law a comprehensive set of international standards known as the Basel III agreement, the Council said. Institutions will be required from January 2014 to make public the number of employees per institution in the group and net banking income.
‘At the same time, all European [systemically important institutions] have to report to the [European Commission] on profits made, taxes paid and subsidies received. During 2014, the European supervisory authorities will help the Commission to analyse this data and conduct an assessment looking at the economic impact (ie. competitiveness, credit availability and levels of investment) and broader financial stability implications of their potential disclosure.
‘From 2015, banks would have to publicly disclose the data unless the Commission, by delegated act, either delays or amends the relevant provisions. A "sunset" clause provides for expiry of this provision, if/when it has been dealt with in other forthcoming legislation (ie. accounting directive).’
How leading banks responded to an MP’s invitation to back tax transparency
Stephen McPartland, the Conservative MP for Stevenage, wrote last autumn to the chief executives of all the FTSE 100 companies, asking them to support a new international accountancy standard for country-by-country reporting. McPartland has published the responses on his website.
Antony Jenkins, group chief executive at Barclays, told McPartland that the transparency of the bank’s disclosures had been recognised in the Building Public Trust awards. Barclays received a ‘highly commended’ award for its tax reporting in 2010/11, he said. The annual Building Public Trust awards are presented by PwC.
Jenkins said Barclays would need to consider carefully any proposal to establish a new international accounting standard with the level of detail McPartland had suggested. Lack of uniformity of accounting standards and tax rules presented a ‘real risk’ that such a proposal ‘may add confusion to readers, rather than clarity’.
Iain Mackay, group finance director at HSBC, said the group’s annual report ‘already contains a significant amount of country-by-country information’. He added: ‘I would sound a note of caution about requiring more detail through a new accounting standard – as things stand our annual report and accounts already run to well over 400 pages of disclosures. However, we would support any initiative that would increase country-by-country tax transparency as part of our sustainability reporting.’
Sarah Prior, group tax director at Lloyds Banking Group, said country-by-country reporting was not a matter that was ‘particularly in point’ for the group, which is ‘a UK centric organisation with a considerably reduced overseas presence’.
