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17 June 2016

Commercial Risk Europe: Insurers bemoan EU tax avoidance proposals


As the European Parliament calls on the EC to beef up anti-tax avoidance measures, Europe's insurers have criticised new EU mandatory country-by-country tax reporting proposals.

Last week the Parliament welcomed a proposed anti-tax avoidance directive but called for tougher measures and more transparency, as well as an EU blacklist of tax havens and sanctions against uncooperative jurisdictions.

The anti-tax avoidance directive is part of a wider package of measures aimed at clamping down on aggressive tax avoidance by corporates. It implements the Organisation for Economic Cooperation and Development's (OECD) anti-tax avoidance recommendations under its Base Erosion and Profit Shifting (BEPS) initiative.

Some countries are said to be concerned that the directive will create too much uncertainty for corporates and may make Europe a less attractive place for foreign investment.

Insurer trade body Insurance Europe criticised a key plank of the EU's anti-tax avoidance policy - the proposal to introduce country-by-country reports (CBCR). The move will require large and multinational companies with group revenue of at least €750m to provide country-by-country reports on tax arrangements to each of the member states in which they operate from 2016.

While Insurance Europe supports the general directions of the EC's anti-tax avoidance efforts, it does not believe that the CBCR, as proposed, will achieve its goals.

The trade body supports the Commission's proposal to introduce automatic exchange of country-by-country reports between national tax authorities, which is aligned with the BEPS action plan. However, it is critical of a separate proposal that would make the publication of country-by-country reports public and mandatory.

Insurance Europe is concerned that CBCR introduces "unsuitable" disclosure requirements that are over and above those required by BEPS, including the need to provide a "narrative" to explain discrepancies between tax accrued and paid.

It also highlighted the need to protect commercially sensitive information under public CBCR disclosure. The trade body said that corporations should be allowed to withhold information where it could have a material negative impact on their competitiveness.

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