EU looks for transparency in multinationals' tax affairs
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(BRUSSELS) - EU Member States gave the go-ahead Wednesday for talks to start on a proposed directive forcing big multinationals to disclose how much income tax they pay in the various EU countries in which they operate.
The EU states' ambassadors are mandating the Portuguese presidency to engage in negotiations with the European Parliament for swift adoption of the proposed directive on the disclosure of income tax information by certain undertakings and branches, which is commonly referred to as the public country-by-country reporting (CBCR) directive.
The directive requires multinational enterprises or standalone undertakings with a total consolidated revenue of more than €750 million in each of the last two consecutive financial years, whether headquartered in the EU or outside, to disclose publicly in a specific report the income tax they pay in each member state, together with other relevant tax-related information.
Banks are exempted from the present directive as they are obliged to disclose similar information under another directive.
In order to avoid disproportionate administrative burdens on the companies involved and to limit the disclosed information to what is absolutely necessary to enable effective public scrutiny, the directive provides for an complete and final list of information to be disclosed.
The reporting will have to take place within 12 months from the date of the balance sheet of the financial year in question. The directive sets out the conditions under which a company may obtain the deferral of such disclosure for a maximum of six years.
It also stipulates who bears the actual responsibility for ensuring compliance with the reporting obligation.
Member states will have two years to transpose the directive into national law.