The European Commission has published its proposals to require multinational companies with annual revenues exceeding €750m to publish country by country reports (CBCR) of their activities in each EU member state. See www.bit.ly/1N63OLI. The Commission estimates this will affect around 6,000 multinationals active in the EU.
Subsidiaries and branches of non-EU headquartered groups would be subject to the reporting obligation on behalf of their ultimate parent, unless the non-EU parent chooses to publish a CBCR on its website. Companies would also have to publish an aggregate figure for total taxes paid in non-EU jurisdictions. The information to be disclosed on a country by country basis falls into seven categories:
the nature of the activities;
the number of employees;
the total net turnover made, which includes the turnover made with third parties, as well as between companies within a group;
the profit made before tax;
the amount of income tax due in the country as a reason of the profits made in the current year in that country;
the amount of tax actually paid during that year; and
the accumulated earnings.
The Commission consulted on the potential for public CBCR between June and September 2015. These proposals will now be implemented through amendments to the EU Accounting Directive. They will complement the amendment to the Administrative Cooperation Directive, introduced as part of the Commission’s corporate anti-avoidance package in January and agreed by finance ministers in March, requiring multinationals to submit country by country reports to tax authorities.
Commenting on the proposals, Julie Hughff, tax partner at KPMG in the UK said: 'The proposals go further than originally planned, with a requirement that the largest multinational groups disclose detailed information about their activities in certain jurisdictions outside of the EU. Those jurisdictions have yet to be decided so the question now is whether member states can reach agreement on which countries should be included on that list.'
Meanwhile, the CIOT questioned whether allowing the public to see the country by country reporting records of companies operating in the EU was enough to counter growing global scepticism about the fairness of the tax system. Glyn Fullelove, chair of CIOT’s International Taxes Sub-committee, said: ‘More public transparency is worthwhile if it increases public trust in the international tax system. But if we are to have public country by country reporting then it would be best to have it on a global basis, otherwise this EU measure, while significant, risks only partially answering the public’s questions about the international tax system.’
The European Commission has published its proposals to require multinational companies with annual revenues exceeding €750m to publish country by country reports (CBCR) of their activities in each EU member state. See www.bit.ly/1N63OLI. The Commission estimates this will affect around 6,000 multinationals active in the EU.
Subsidiaries and branches of non-EU headquartered groups would be subject to the reporting obligation on behalf of their ultimate parent, unless the non-EU parent chooses to publish a CBCR on its website. Companies would also have to publish an aggregate figure for total taxes paid in non-EU jurisdictions. The information to be disclosed on a country by country basis falls into seven categories:
the nature of the activities;
the number of employees;
the total net turnover made, which includes the turnover made with third parties, as well as between companies within a group;
the profit made before tax;
the amount of income tax due in the country as a reason of the profits made in the current year in that country;
the amount of tax actually paid during that year; and
the accumulated earnings.
The Commission consulted on the potential for public CBCR between June and September 2015. These proposals will now be implemented through amendments to the EU Accounting Directive. They will complement the amendment to the Administrative Cooperation Directive, introduced as part of the Commission’s corporate anti-avoidance package in January and agreed by finance ministers in March, requiring multinationals to submit country by country reports to tax authorities.
Commenting on the proposals, Julie Hughff, tax partner at KPMG in the UK said: 'The proposals go further than originally planned, with a requirement that the largest multinational groups disclose detailed information about their activities in certain jurisdictions outside of the EU. Those jurisdictions have yet to be decided so the question now is whether member states can reach agreement on which countries should be included on that list.'
Meanwhile, the CIOT questioned whether allowing the public to see the country by country reporting records of companies operating in the EU was enough to counter growing global scepticism about the fairness of the tax system. Glyn Fullelove, chair of CIOT’s International Taxes Sub-committee, said: ‘More public transparency is worthwhile if it increases public trust in the international tax system. But if we are to have public country by country reporting then it would be best to have it on a global basis, otherwise this EU measure, while significant, risks only partially answering the public’s questions about the international tax system.’
