29 January 2016

EurActiv: Juncker backs forcing multinational companies to publish their tax bills

European Commission President Jean-Claude Juncker supports forcing multinational companies like Google, Amazon, and Apple to publish the profits they make and the taxes they pay in each EU country they operate in.

Global companies exploit their network of subsidiaries and favourable tax regimes in some countries to shift profits around and minimise their tax bills. On Thursday (28 January), the Commission announced its Anti-Tax Avoidance Package, which included a proposal for member states to share tax-related information about subsidiary firms of global companies.

That data will remain secret and in the hands of national tax authorities, in line with the Base Erosion and Profit Shifting (BEPS) international standards agreed by the OECD last year.

EurActiv has learnt Juncker, and many of his team of Commissioners, are ready to go further than BEPS by making the information publicly available.“The idea has really gained momentum,” sources said.

Juncker’s support is conditional on ongoing Commission analysis finding that public country by country reporting will not harm Europe’s economy. A decision is expected in May, if not earlier.

Yesterday’s proposal is part of a tax directive. All EU tax legislation requires the unanimous support of all 28 member states to make it onto the lawbooks.

But the executive is targeting either the revised Shareholder’s Rights Directive or Accounting Directive to be the vehicle for greater transparency.

Both fall under the remit of British Commissioner Jonathan Hill’s financial services department. Crucially, neither requires the unanimous support of member states, but can instead by passed by qualified majority. There was also little time to prepare the groundwork for public reporting before the package was due.

If ultimately successful, the public reporting requirement could repair some of the damage that the LuxLeaks tax scandal caused Juncker’s presidency. He was prime minister and finance minister when Luxembourg struck sweetheart tax deals with global corporations.

Public reporting will apply to both EU and non-EU multinationals such as the aformentioned Google, whose astonishing low tax bills have caused public fury across EU, most recently in the UK. The European Parliament and NGOs such as Action Aid, Christian Aid, and Oxfam have demanded public reporting.

The EU already has a public country by country reporting requirement for banks and mining companies in its fourth Capital Requirements Directive.

Step by step

Speaking yesterday, Tax Commissioner Pierre Moscovici said he was in favour of public country by country reporting but stressed the need for a “step by step” approach.

He conceded there was huge public pressure to unmask the tax avoidance of multinationals, which drain revenue from the coffers of governments, driving up payments for citizens and smaller businesses.

Full article on EurActiv

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