The proposal for public CBC reporting, as approved by European Parliament’s Economic and Monetary Affairs and Legal Affairs committees, contains possible exemptions for commercially sensitive information.
On Monday, MEPs on the Committees on Economic and Monetary Affairs and on Legal Affairs voted in favour of proposals for public country by country reporting (CBCR).
While the OECD still maintains that CBCR data should not be published, this vote represents an example of the EU looking to go further. The EU is now a step closer to requiring large businesses to put significant amounts of data into the public domain.
Taking one step back in the EU process, the European Commission proposal applied to multinationals with a global turnover above €750m, and a turnover over €40m in any EU member state. They were to be required to publish CBCR data for each EU member state and for any countries on the anticipated EU ‘blacklist’ of tax havens. Data for the rest of the world was to be published on an aggregated basis.
There were proposals and counterproposals to amend this requirement, but the proposal voted on this week differed from the Commission’s proposal in two key aspects:
Multinationals would be required to publish CBCR data for every country in which they operate. It was argued that aggregating data for the rest of the world would seriously undermine the rules, and prevent people from knowing whether companies are shifting profits out of the EU.
Member states would be allowed to exempt a multinational from publishing specific pieces of data if they are deemed to be ‘commercially sensitive’.
Responses to this vote have varied. Many within civil society have welcomed the extension to cover every country, while saying that the ‘commercially sensitive’ exemption renders the requirement ineffective. Transparency International’s EU policy officer Elena Gaita said the amendment ‘makes the text about as watertight as a sponge’.
Fabio De Masi MEP, vice chair of the European Parliament’s Panama Inquiry Committee said, ‘Public country by country reporting is an important weapon in our fight for greater tax justice. It is thus all the more regrettable that the liberals and the conservatives have disarmed the public.’
By contrast, Dariusz Rosati MEP defended limits on transparency, accusing European socialists of discriminating against European companies. ‘We want to make visible how multinational companies shift their profits to low tax countries. But European companies doing business outside Europe must not be forced to reveal everything if competitors don’t.’
Rosati also linked CBCR and the common consolidated corporate tax base (CCCTB). ‘Country by country reporting does not fix the problem, but makes visible where the problem lies. The next thing to do is to harmonise the way corporate tax is calculated all over Europe without levelling tax rates.’
This is not the end of the story. This version of public CBCR will now need to be confirmed in a plenary vote of the European Parliament, and will then move to trialogue negotiations with the parliament, member states and the Commission. At this point, a range of opinions in countries including France, Germany and Malta need to be reconciled. Negotiations will also be affected by the ongoing debate over whether public CBCR is a tax issue, which requires unanimity, or an internal market issue, which doesn’t.
The proposal for public CBC reporting, as approved by European Parliament’s Economic and Monetary Affairs and Legal Affairs committees, contains possible exemptions for commercially sensitive information.
On Monday, MEPs on the Committees on Economic and Monetary Affairs and on Legal Affairs voted in favour of proposals for public country by country reporting (CBCR).
While the OECD still maintains that CBCR data should not be published, this vote represents an example of the EU looking to go further. The EU is now a step closer to requiring large businesses to put significant amounts of data into the public domain.
Taking one step back in the EU process, the European Commission proposal applied to multinationals with a global turnover above €750m, and a turnover over €40m in any EU member state. They were to be required to publish CBCR data for each EU member state and for any countries on the anticipated EU ‘blacklist’ of tax havens. Data for the rest of the world was to be published on an aggregated basis.
There were proposals and counterproposals to amend this requirement, but the proposal voted on this week differed from the Commission’s proposal in two key aspects:
Multinationals would be required to publish CBCR data for every country in which they operate. It was argued that aggregating data for the rest of the world would seriously undermine the rules, and prevent people from knowing whether companies are shifting profits out of the EU.
Member states would be allowed to exempt a multinational from publishing specific pieces of data if they are deemed to be ‘commercially sensitive’.
Responses to this vote have varied. Many within civil society have welcomed the extension to cover every country, while saying that the ‘commercially sensitive’ exemption renders the requirement ineffective. Transparency International’s EU policy officer Elena Gaita said the amendment ‘makes the text about as watertight as a sponge’.
Fabio De Masi MEP, vice chair of the European Parliament’s Panama Inquiry Committee said, ‘Public country by country reporting is an important weapon in our fight for greater tax justice. It is thus all the more regrettable that the liberals and the conservatives have disarmed the public.’
By contrast, Dariusz Rosati MEP defended limits on transparency, accusing European socialists of discriminating against European companies. ‘We want to make visible how multinational companies shift their profits to low tax countries. But European companies doing business outside Europe must not be forced to reveal everything if competitors don’t.’
Rosati also linked CBCR and the common consolidated corporate tax base (CCCTB). ‘Country by country reporting does not fix the problem, but makes visible where the problem lies. The next thing to do is to harmonise the way corporate tax is calculated all over Europe without levelling tax rates.’
This is not the end of the story. This version of public CBCR will now need to be confirmed in a plenary vote of the European Parliament, and will then move to trialogue negotiations with the parliament, member states and the Commission. At this point, a range of opinions in countries including France, Germany and Malta need to be reconciled. Negotiations will also be affected by the ongoing debate over whether public CBCR is a tax issue, which requires unanimity, or an internal market issue, which doesn’t.
