by Julie Martin and Davide Anghileri
An EU Commission proposal to require public country-by-country reporting by multinationals operating in Europe should be extended to cover many more multinationals and mandate much more robust public disclosure, a draft EU Parliament committee report has concluded.
The February 9 draft, prepared by the EU Parliament’s Committee on Economic and Monetary Affairs and Committee on Legal Affairs, proposes several major amendments to the EU Commission’s April 12, 2016, draft amended directive requiring large multinational corporations to publicly disclose tax information on a country-by-country basis.
The EU Parliament draft would set the public country-by-country reporting threshold for EU-headquartered large groups with 250 employees at €40 million consolidated net turnover, rather than the Commission’s suggested €750 million threshold.
Under the draft, EU subsidiaries controlled by a non-EU headquartered parent must also file a country-by-country report if consolidated net turnover exceeds €40 million.
Moreover, multinationals would be required to publicly disclose information on a country-by-country basis on their worldwide activities in all tax jurisdictions, not just in EU member states or non-EU countries considered to be tax havens.
Further, the draft would require more data disclosure. For example, an MNE must report not only net turnover with related parties, but also turnover with unrelated parties.
The EU Parliament draft would also delete a major loophole in the Commission proposal which allows MNEs to limit their public disclosures to information they consider “necessary to enable effective public scrutiny [and that does] not give rise to disproportionate risks or disadvantages.”
The EU Parliament draft suggests that the income tax information be published in a common template, available in an open data format, and made accessible to the public on the website of the subsidiary or on the website of an affiliated undertaking in at least one of the official languages of the EU.
On the same date, the undertaking would also file the report in a public registry managed by the European Commission, the Parliament report urges.
Finally, the draft suggests that Member States provide adequate resources to tax administrations to guarantee the success of public country-by-county reporting.
Julie Martin
Julie Martin is the founder of MNE Tax. She edits the publication and regularly contributes articles on new developments in cross-border business taxation.
Julie has worked as a tax journalist and editor for more than 13 years. Prior to that, she worked as an in-house tax attorney in New York. She also holds an LLM in taxation from New York University School of Law.
Julie can be reached at [email protected].
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Davide Anghileri
Davide Anghileri is a PhD candidate at the University of Lausanne, where he is writing his thesis on the attribution of profits to PEs. He researches transfer pricing issues and lectures for the Master of Advanced Studies in International Taxation and Executive Program on Transfer Pricing.
Anghileri, a Contributing Editor at MNE Tax, previously worked as a policy advisor to the Swiss government on BEPS issues.
Davide can be reached at [email protected].
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The introduction of the Common Consolidated Corporate Tax Base (CCCTB), the application of country-by-country reports for the MNEs operating within the EU might get nullified. Thoughts?
OFFHAND
As viewed independently, but not without substance, this makes for one more significant development in the direction of ‘reporting ‘ by Financial Institutions’ , to come into operation in the near future.
Cross refer: Previous Posts, the last two of Dt. Dec 25 2016 HERE
https://www.facebook.com/swaminathanv3/posts/1181006748642276
https://www.facebook.com/swaminathanv3/posts/1181024788640472
https://www.facebook.com/swaminathanv3?fref=nf