EU finance ministers last week agreed to make the largest corporations operating in the EU report their activities to tax administrations. It follows a serious of rulings and investigations by the European Parliament and Commission.
However, critics say the new tax arrangement — for multinationals with a total consolidated group revenue of at least US$847 million — will only involve passing tax information between member states' tax agencies and will not be made public or available to journalists.
"If only companies headquartered in the EU are legally required to file reports on a country-by country basis, the legislation will be much less effective. Subsidiaries that are part of non-EU companies should be covered in the requirement, regardless of the size of the subsidiary, provided that the whole group meets the threshold," Elena Gaita, Policy Officer on Corporate Transparency at Transparency International told Sputnik.
"Country by country reporting is an integral piece of the anti-tax avoidance puzzle, but keeping these reports confidential will make it nearly impossible for developing country governments, journalists, or the general public to scrutinize the operations of multinational corporations. Public reporting is also key for investors who want to know if they are making sound business decisions," said Koen Roovers, EU Lead Advocate for the Financial Transparency Coalition.
Only Applies to Top 10-15 Percent
Campaign groups have been critical that the European Commission has set the level of reporting at US$847. Aurore Chardonnet, EU Policy Adviser at Oxfam International said:
"The threshold set by member states would mean that just 10 to 15 per cent of all multinationals would have to file reports. This is a clear sign that governments are not hearing the growing demand for tax transparency. Excluding the vast majority of multinationals because they don't meet a high threshold of revenue does not create the transparency we desperately need."
In January 2016, the European Commission branded the Belgian "excess profit" tax scheme illegal under EU state aid rules and ordered the country to recover the US$760 million unpaid tax from the companies concerned, most of which are major multinationals.
In October 2015, the Commission ruled that Luxembourg and the Netherlands have granted selective tax advantages to Fiat and Starbucks, respectively. The Commission also has three ongoing in-depth investigations into concerns that tax rulings may give rise to state aid issues, concerning Apple in Ireland, Amazon in Luxembourg and McDonald's in Luxembourg.
The investigation into Ireland's tax treatment of Apple is ongoing. Last December, the Commission opened an investigation into Luxembourg's tax deal with McDonald's.