Today, negotiators from the European Parliament, European Commission and the Council reached a political deal on a new EU directive that has public country by country reporting in its name, but not in its content. The agreement follows a long process, which was initiated in April 2016 when the European Commission first launched its draft directive.

In response to the political agreement, which has yet to be formally adopted, Tove Maria Ryding, Tax Coordinator at the European Network on Debt and Development (Eurodad), said:

“It is a sad day for the EU’s fight against corporate tax avoidance. The only thing worse than taking over five years to agree on public country by country reporting is to take five years and then fail to deliver. Unfortunately, this is what the negotiators from the European Parliament, Commission and the Council have done today. The fact that today’s agreement includes a review after four years is completely absurd – we obviously cannot wait that long to repair this failure. In our opinion, the European Parliament and Council should vote no to this deal and send the negotiators back to do the job they were supposed to do – namely fight corporate tax avoidance.

“We’re in a middle of a global crisis, but while many big multinational corporations are cashing in record profits, large-scale corporate tax avoidance continues to cost our societies billions of Euros in lost tax income every year. We know that public country by country reporting can help solve this problem, and that is why we need urgent action. Sadly, today’s agreement has been watered down so much that it will not be effective.”

Commenting on the content of the agreement, Ryding said:

“What we are trying to achieve is transparency that can help fight corporate tax avoidance and serve as a strong incentive for corporations to stop trying to hide their profits in tax havens. This information is not only vital for parliamentarians, journalists and civil society organisations, but also for tax administrations in the world’s poorest countries, which today have great difficulties accessing the information they need to tax corporations effectively. But it will not work unless the data is disaggregated on a country by country basis. Unfortunately, today’s agreement is not real country by country reporting. Most of the world’s countries are not covered by the disaggregated reporting, which means they will become black spots on the map, and there is a high risk that multinational corporations will use those countries to hide profits.

“As if the deal was not weak enough already, the negotiators even added a loophole that will allow corporations to withhold information for up to five years if it is considered commercially sensitive. The experience we have with public country by country reporting for banks shows that the only sensitive information which gets revealed is data showing that corporations are continuing to shift their profits to low-tax jurisdictions. But if that kind of information can be withheld you really start wondering what the purpose of the reporting is.”

Commenting on the fact that the agreement entails country by country reporting for countries on the EU’s black- and grey-list of non-cooperative tax jurisdictions, Ryding said:

“The so-called EU tax haven blacklist and greylist are deeply flawed political tools, and experience shows that we definitely cannot count on them to include the relevant tax havens. At the moment, you will not find Switzerland, or Singapore, or British Virgin Islands or Cayman Islands on the EU blacklist or grey list. Instead, you will find countries and jurisdictions such as Anguilla, Guam, Fiji, Samoa and Thailand, which really are not the big concern when it comes to corporate tax avoidance.” 

ENDS

Media contact: Julia Ravenscroft, Communications Manager, Eurodad: +32 486356814/ [email protected]

Notes to editors

• Negotiators from the European Parliament, Council and Commission reached agreement on a compromise text in a third round of inter-institutional negotiations on a proposed amendment to the Directive of the European Parliament and of the Council amending Directive 2013/34/EU as regards disclosure of income tax information by certain undertakings and branches. This agreement must now go through formal approval by the European Parliament and Council.
• 80 civil society organisations wrote to the negotiating team from the European Parliament, urging them not to support an agreement on public country by country reporting unless it obliges large multinationals to report on a country by country basis for all countries of operation. As explained in the letter, without this, reporting obligations cannot be considered country by country reporting. The letter can be found here.
• Investors representing US$5.6 trillion in assets have written to the co-rapporteurs from the European Parliament and the Portuguese Presidency of the Council of EU Member States to call on them to support full public county by country reporting. The letter calls for real transparency that would require multinational corporations to report on activities in every country they do business in and highlights that a Directive without reporting on a country by country basis (global disaggregation) could be counter-productive and would not be valuable to investors. The letter can be found here. 
• In recent weeks, more than 130,000 people have signed a petition urging EU decision makers to introduce ambitious and public country by country reporting.
• Media outlet Contexte published a story in April detailing how corporate lobbyists allegedly drafted France’s official position on public country by country reporting. The story can be found here and Eurodad’s reaction here.