MEPs back new tax disclosure rules for multinationals
Apple Store - Image John Bragg
(STRASBOURG) - Members of the European Parliament gave their backing Wednesday to new rules to force large firms to make information about the tax bills they pay on a country-by-country basis publicly available.
The proposals aim to crack down on corporate tax avoidance, estimated to cost EU countries EUR 50-70 billion a year in lost tax revenues, according to the EU Commission.
"Each euro of tax which is not paid by the multinationals is a euro too much paid by the individual," said Parliament's co-rapporteur for the legislation Hugues Bayet MEP.
Under the proposed measures, the income tax information of multinational firms with worldwide turnover of EUR 750 million or more would be published in a common template in each tax jurisdiction in which the firm or its subsidiary was operating. This data would be available for free and made publicly accessible on the website of the firm.
The company would also be responsible for filing a report in a public registry managed by the European Commission. The information would include:
- the name of the firm and, where applicable, the list of all its subsidiaries, a brief description of the nature of their activities and their respective geographical location;
- the number of employees on a full-time equivalent basis;
- the amount of the net turnover;
- stated capital;
- the amount of profit or loss before income tax
- the amount of income tax paid during the relevant financial year by the firm and its branches resident for tax purposes in the relevant tax jurisdiction
- the amount of accumulated earnings
- whether undertakings, subsidiaries or branches benefit from a preferential tax treatment
MEPs supported measures to protect commercially-sensitive information by allowing Member States to grant exemptions from the requirement to provide one or more pieces of information. These exemptions, to be renewed annually, would only be applicable in the jurisdiction of the Member State granting the exemption.
Once an exemption is granted, it will have to inform the Commission confidentially about the omitted information, together with a detailed explanation for the exemption.
Every year, the Commission will publish on its website a list of firms which were granted exemptions and a succinct explanation as to why.
MEPs also supported amendments which would set limits on exemptions won by firms on providing their tax information. One obliges companies who lose their eligibility for an exemption to immediately make the omitted data publicly available. Firms will also have to apply for a renewal of their exemption, annually.
In addition, at the end of the non-disclosure period, the firm must publish its tax details retroactively "in the form of an arithmetic average" to cover that period when they did enjoy immunity from providing details.
The report will now be sent back to the Parliament's Committees to start negotiations in 1st reading on the basis of a plenary mandate.
Further information, European Parliament