The European Commission will likely propose EU-wide legislation requiring large multinationals to publicly report their European profits and taxes paid on a country-by-country basis, according to a report.
The Guardian revealed on Sunday that three unnamed senior officials said that a Commission impact assessment has initially concluded that the EU should require large multinationals to publicly reveal the tax and profits they pay in every country.
The impact assessment has “really swayed opinion” of Commission officials to support of public reporting, the Guardian reported a source as saying.
The Commission announced last March that it would examine the feasibility of new transparency requirements for companies, including the possibility of public release of multinational country-by-country reporting data.
At that time, the Commission noted that the EU already requires public country-by-country reporting for banks and for extractive and logging companies. “Extending the obligation for public disclosure of certain tax information by multinational companies in all sectors could place companies under closer public scrutiny and create more awareness of their tax practices,” the Commission said. It added that the risks of any such disclosures would need to be balanced against the benefits.
According to the Guardian, the impact assessment rejects multinationals’ arguments that public disclosure would damage commercial competitiveness. Sources also said that public reporting would only apply to large multinationals and that a formal proposal is planned for release in early April.
In its anti-tax avoidance package (ATAP) proposal, released last month, the Commission recommend that the EU adopt country-by-country reporting consistent with the OECD/G20 base erosion profit shifting project agreed-to standards. Under these rules, the country-by-country reports would only be seen by tax officials and strict confidentially of the reports would be maintained.
In discussing the ATAP package, though, Pierre Moscovici the EU Commissioner for Economic and Financial Affairs, Taxation and Customs, assured that the public release of country-by-country reports was not off the table; rather, the EU regulators were awaiting the results of the impact assessment before deciding its next steps.
Moscovici added that he personally supports public release of the data. Similar statements have been attributed to European Commission President Jean Claude Juncker.
The Netherlands, through State Secretary of Finance Eric Weibes, has also expressed support for public release of country-by-country data.
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