Following months of negotiations by the Committee on Economic and Monetary Affairs, on July 4, the European Parliament voted on the report on public Country-by-Country reporting at last. In doing so, the position of Parliament has been fixed – this position must now be defended in the forthcoming Trilogue negotiations with the Council.
Plenty of negotiations went on right to the end. The last debate on the Regner-Bayet Report, which requests that major multinational companies publically report their profits generated in each country they operate in, has taken place in the plenum in Strasbourg only a few hours prior to the final vote.
The joint position of Parliament provides for the following: starting at a minimum net turnover of 750 million euro (OECD-Standard), companies are obliged to publish reports for all countries in which they have headquarters or branches. This concerns European multinationals and those, which are active within the EU but are registered outside the EU. These reports must contain the name of the company, a description of activities, a list of employees and information on profits, losses, paid income tax as well as any existing tax relief. However, companies might not disclose this information if it concerns economically sensitive data. This exception is a protective clause and must be approved by the respective Member State; the Commission has to be notified, a reason given and it has to undergo an annual review. As soon as an exception is no longer granted, the relevant information must be disclosed retrospectively.
The position of Parliament represents a compromise, which was adopted across all factions with 534 votes in favour, 98 votes against and 62 abstentions. However, the last debate prior to the vote made it clear: the proposal divides Parliament.
Both, EPP and ALDE, believe that the proposal is going too far: the protective clause had only been included in the proposal because of their initiative with the purpose of protecting European competitiveness. However, when taking a closer look at major European banks, it becomes clear that transparency is definitely not detrimental to competitiveness. These have been obliged to provide publically accessible reports since 2013 and manage without exemptions, which would only create new loopholes for companies and countries. A Study by NGO Oxfam on reports to which banks are already obliged to, shows what important information comes to light.
S&D, the Greens/EFA and GUE/NGL agree differently: the EU could go beyond international OECD Standards and should assume a pioneering role in the fight against tax avoidance and evasion. In particular, the GUE/NGL thinks that the proposal is not going far enough. Also the S&D group and the Greens/EFA have clearly come out in favour of a lower threshold value of 40 million Euro minimum net turnover to oblige far larger multinational companies to become more transparent. All three groups agree, transparency, which goes beyond tax authorities and provides freely accessible information for all, is an important milestone to combat tax avoidance and tax evasion.
In spite of the weakened version, the adoption of the proposal is an important success for more tax fairness, which must now be defended in the forthcoming negotiations with the Council and thereby against the national interests of Member States to ensure that it can be implemented as efficiently as possible.