05/03/21

INTERNATIONAL TAX: Talks on EU corporate tax transparency law to start ‘very soon’.

As published on euractiv.com, Friday 5 March, 2021.

The European Parliament said on Thursday (4 March) it expected negotiations to start “very soon” with Portugal’s EU Presidency on a new EU directive to make multinationals publish information on where they make profits and pay taxes.

“Four years after the European Parliament adopted its position on draft country-by-country reports, EU governments are prepared to sit down at the negotiating table and reach an agreement,” the EU Parliament said in a statement.

In a note released one day after the Portuguese presidency of the Council was mandated to hold talks with the parliament on the new tax transparency law for multinationals, the parliament said it expected “these negotiations will begin very soon.”

In its position adopted four years ago, the EU House said multinationals’ information should be presented separately and for each tax jurisdiction outside the EU. These large companies should make their annual financial report public and free of charge.

The European Parliament also called for the introduction of a safeguard clause for sensitive company data.

At stake is the ‘Public country-by-country reporting’ directive. Portugal received support on Wednesday to start negotiations with the European Parliament in so-called ‘trilogue’ talks with the European Commission, which presented the original proposal back in 2016.

On Wednesday, the 27 gave the Portuguese EU Presidency a mandate to start the dialogue to adopt this EU law to force multinationals to publish information on where they make profits and pay taxes.

According to the proposal, seen by Lusa, “public scrutiny of corporate income taxes borne by multinational companies operating in the Union needs to be strengthened, as this is essential in furthering transparency and corporate responsibility”.

“Establishing common rules on corporate tax transparency will also serve the general economic interest by providing equivalent safeguards throughout the Union for the protection of investors, creditors and other third parties in general, helping to restore citizens’ confidence in the Union in the fairness of national tax systems,” it reads.

The original proposal, presented by the EU executive in 2016, focuses on a new directive that will require large multinational companies to publish country-by-country information on where they make their profits and where they pay tax.

It is envisaged that such additional transparency rules would apply to active companies in the single market, have a permanent presence in the EU and have annual revenues of more than €750 million per year.

According to Brussels figures, corporate tax avoidance in Europe costs EU countries an estimated €50-70 billion a year.