Public Country-by-country-reporting: big step forward towards tackling tax avoidance practices
MEPs today adopted new rules, the so-called public country-by-country-reporting (CBCR), which will require big Multinationals to publish, country by country where they operate, the nature of their activities, the number of employees, fixed assets, the amount of net turnover, profit or loss before income tax, income tax accrued, the actual amount of income tax paid, the amount of accumulated earnings and stated capital. ALDE believes that companies should pay taxes in the country where profits are generated. To control this, we need to create full transparency, notably on big multinational operators, which can easily avoid paying taxes by shifting their profit to more beneficial countries, also outside the EU. Especially against the backdrop of recent tax avoidance scandals, Liberals and Democrats in the European Parliament welcome today’s vote and call on the Council to take a position on this important file.
Jean-Marie Cavada, ALDE Shadow Rapporteur and Vice President of the Legal Affairs Committee, said today:
“Scandals like Lux Leaks or the Panama Papers have made it more than perfectly clear that there is a need for an ambitious approach towards more tax transparency. Worldwide reporting, also for non-EU operators, will create a global level playing field and will cover more than 90% of all Multinationals in the World. Moreover, the Liberals and Democrats made sure that we will soon know which EU companies prefer to pay taxes in Panama, Hong-Kong or Switzerland, even when their main activity takes place within the EU: the figures have to be disaggregated. The compromise text, carefully brokered by ALDE is a fair balance between transparency on the one side and protection of sensitive commercial data on the other side. A review clause completes the solution found between the two big groups. ”
The loss of tax revenue each year is estimated to 50-70 billion EUR.
Ramon Tremosa i Balcells, ALDE Shadow Rapporteur and Coordinator of the Economic and Monetary Affairs Committee, added:
"Country-by-country-reporting will be a big step forward in the fight against tax avoidance practices. A fair, transparent and efficient corporate tax system will help to ensure the effective functioning of the single market. But greater tax transparency is not only about tackling tax avoidance, it also concerns the accountability of democracy as such. ALDE therefore urges the Council not to hide behind perfidious legal arguments but to present a general approach in order to advance this file as soon as the Parliaments resumes its business after the elections.”
Note to editors
Today’s voted text foresees only a limited and temporary derogation for companies to allow them to avoid disclosing publicly sensitive information. Only sensitive information may not be disclosed, so no company will get a total exemption. After one year, this derogation must be reviewed. The European Commission shall make sure that these derogations are not excessively granted