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#Country-by-country-reporting: Increased tax transparency without jeopardizing competitiveness

Today (4 July), MEPs adopted new tax transparency rules for multi-national companies – so-called country-by-country-reporting (CbCR). Liberals and Democrats in the European Parliament welcome the approval of today’s well-balanced compromise, which the ALDE group has long been fighting for. It will ensure tax transparency, while securing the competitiveness of European companies.

ALDE Shadow Rapporteur and Coordinator of the Legal Affairs Committee Jean-Marie Cavada said: “It was clear that we have to respond to recent tax avoidance scandals like Lux Leaks or Panama Papers; practices like these must urgently be put to an end. Today, we have called for detailed reporting of where in the world taxes are paid, by the big multinationals that operate in Europe. At the same time we must not put our companies in Europe at a competitive disadvantage. With the compromise we have now, we secure both – transparency as well as competitiveness.”

ALDE Shadow Rapporteur and Coordinator in the Economic and Monetary Affairs Committee Ramon Tremosa i Balcells added: “We have long been advocating for greater transparency, especially when it comes to tax transparency. True liberalism goes against crony capitalism. Having more transparent multinationals is first and foremost about building a healthier and accountable democracy.”

Greens/EFA Shadow Rapporteur in the European Parliament’s Economic and Monetary Affairs Committee Ernest Urtasun said: “After years of campaigning, this is a big victory for all those that have worked hard for tax justice. The case for greater tax transparency is unanswerable. If the EU is serious about cracking down on hidden and unscrupulous tax deals, it needs to end the secrecy that allows these practices to flourish. Public country-by-country reporting will make it much harder for multinational corporations to shop around for the lowest possible tax rate, and help bring illegal activity to light. That means more money for national governments to invest in their people, and a greater sense of fairness in how we tax profits across the EU.

“Big corporations have already shown themselves to be highly adept at seeking out loopholes. It is a shame that so many MEPs chose today to make their life that much easier. The so-called safeguard clause could lead to companies being able to keep their financial arrangements in the dark, stopping country-by-country reporting from fulfilling its promise.”

Today’s voted text requires multinationals to publish, for each country where they are established, their assets and taxable income in that country, the amount of tax paid, and the number of employees, among other things. The text foresees only a limited and temporary derogation for companies to allow them to avoid disclosing publicly sensitive information. Only sensitive information may not be disclosed, so no company will get a total exemption. After one year, this derogation must be reviewed. The European Commission ensure that these derogations are not excessively granted.

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Category: A Frontpage, Corporate tax rules, EU, European Commission, Taxation

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