(13 May 2016) – Yesterday, the European Parliament adopted a draft directive that would see 90% of multinational companies escape compulsory country-by-country reporting requirements.
The vote that took place in Strasbourg on Thursday (12 May) suggests that the EU’s efforts to improve tax transparency by enforcing country-by-country reporting for businesses’ activities are merely a façade. MEPs rejected a crucial amendment to the draft directive from the European Commission, which would have ensured the transparency rules applied to a large proportion of multinational companies operating in the EU.
The draft directive aims to facilitating the exchange of information on business activities between Europe’s tax authorities. But as things stand, it will leave the vast majority of multinational companies unaffected. At €750 million turnover per year, the reporting system’s high threshold would exclude some 85-90°% of multinationals, as this OECD document shows. The figure of €750 million is borrowed from the OECD’s Base Erosion and Profit Shifting (BEPS) project to combat tax optimisation, currently under negotiation by 34 countries.
The Socialists had submitted an amendment proposing to lower this threshold from €750 million to €40 million. It was rejected in Thursday’s plenary session in Strasbourg. (EurActiv)