EU finance ministers in March agreed to make the largest corporations operating in the EU report their activities to tax administrations, in a system known as country-by-country reporting (CBCR). It follows a series of rulings and investigations by the European Parliament and Commission.
However, critics say the new tax arrangement — for multinationals with a total consolidated group revenue of at least US$847 million — will only involve passing tax information between member states' tax agencies and will not be made public or available to journalists.
.@EPSUnions and 40 other organisations write to @JunckerEU demanding a serious CBCR proposal https://t.co/1WadHcl5Yv pic.twitter.com/B93uoUxG6D
— taxjustice (@taxjustice_) April 5, 2016
Now a number of campaign groups — including ActionAid, CCFD-Terre Solidaire, Global Policy Forum, Transparency International EU, Transparency International France and War on Want — have written to Juncker urging him to move from the intra-EU reporting that the leaked draft would deliver to actual public country-by-country reporting.
#taxdodging are fuelled by lack of #transparency. @JunckerEU must push for #taxjustice w public #CBCR! #panamapapers https://t.co/IzPuP8McJO
— EUROPEAN TRADE UNION (@etuc_ces) April 5, 2016
"The draft proposal published in the media on 21 March contains several worrying elements. Firstly, the obligation for multinationals to report on a country-by-country basis only inside the EU, while publishing aggregated data from all third countries, would make this proposal unfit for purpose.
"Public country-by-country reporting should provide the public with key information on the activities of multinationals, including the taxes paid on profits made in each country in which they operate. By only publishing country-by-country data from EU countries, the proposal as leaked would effectively allow multinationals to continue shifting their profits out of the EU while still keeping citizens in the dark," the letter says.
Message to Juncker: 'Effective Tool'
The groups said setting the threshold for companies covered by the reporting requirement at US$847 million in annual consolidated turnover would — according to the OECD's estimates — exclude 85-90 percent of multinationals from the reporting requirement.
A lower threshold would cover more companies, providing more data on the activities of multinationals and ensuring a more level playing field.
"We therefore urge you to make sure the final proposal on public country-by-country reporting that the European Commission will present in April takes [these] issues into account in order for it to be an effective tool that delivers the transparency urgently needed in the fight against corporate tax avoidance and corruption," the letter said.
In January 2016, the European Commission branded the Belgian "excess profit" tax scheme illegal under EU state aid rules and ordered the country to recover the US$760 million unpaid tax from the companies concerned, most of which are major multinationals.
In October 2015, the Commission ruled that Luxembourg and the Netherlands have granted selective tax advantages to Fiat and Starbucks, respectively. The Commission also has three ongoing in-depth investigations into concerns that tax rulings may give rise to state aid issues, concerning Apple in Ireland, Amazon and McDonald's in Luxembourg.
The investigation into Ireland's tax treatment of Apple is ongoing. Last December the Commission opened an investigation into Luxembourg's tax deal with McDonald's.
