EU takes step towards tax transparency
By ECCT staff reporters
A majority of EU governments have agreed to push ahead with plans for more corporate tax transparency, unblocking progress on draft rules that have stalled for half a decade. The EU’s so-called country-by-country reporting initiative was proposed in 2016 to combat aggressive corporate tax planning by placing obligations on large multinationals to disclose where they made their profits and how much tax they paid.
The backing of the measure by a qualified majority of member states follows years of disappointment for tax activists. At a meeting of ministers on 25 February, Germany, Ireland, Luxembourg, Malta, Sweden, Czech Republic, Hungary and Cyprus had again sought to block the proposal by voting against it or abstaining. A breakthrough was achieved, however, when Slovenia and Austria joined Finland, Greece, Denmark, Estonia, Romania, Poland, Netherlands, Italy, Spain, France, Bulgaria and Belgium in supporting it.
Country-by-country reporting is designed to show how some of the world’s biggest companies, such as Apple, Facebook and Google, avoid paying an estimated US$500 billion a year in taxes by shifting their profits from higher-tax countries such as the UK, France and Germany to zero-tax or low-tax jurisdictions including Ireland, Luxembourg and Malta.
The decision by the member states to move forward with the proposal, first tabled by the European commission after the 2014 LuxLeaks scandal exposed the sweetheart deals being offered by Luxembourg, was celebrated by senior MEPs who have campaigned for reform.
The breakthrough paves the way for final negotiations between the European Parliament and the European Commission to begin. Some MEPs have pushed for multinationals to make public their profits and tax paid in any country, rather than just EU member states, as the price for operating in the bloc.