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14 April 2016
Client Alert | Tax | EU Law
On 12 April 2016, the European Commission published its legislative proposal for public country-by-country reporting (“the CBCR proposal”). This proposal aims at promoting tax transparency and accountability by imposing on certain multinational companies the obligation to publish tax information, broken down country-by-country.
This Commission legislative proposal is one more piece in the European puzzle of recent measures adopted to fight tax avoidance and promote transparency. It comes in the wake of the Anti-Tax Avoidance Package issued by the Commission back in January this year and duplicates for certain multinational companies the requirement to disclose tax information on a country-by-country basis - a requirement already imposed for instance on banks and investment firms under Directive 2013/36/EU (CRD IV).
In principle, public country-by-country reporting allows stakeholders to gain a better understanding of the structures of financial groups, of their activities and geographical presence. It helps to understand whether taxes are being paid where the actual business activity takes place.
This is a carefully thought through but ambitious proposal for more transparency on tax. While our proposal on CBCR is not of course focused principally on the response to the Panama papers, there is an important connection between our continuing work on tax transparency and tax havens that we are building into the proposal.
Lord Hill
Earlier this year, a first draft of the CBCR proposal opted for limited disclosure, with a detailed country-by-country breakdown for tax information related to EU Member States, but on an aggregated basis for non-EU jurisdictions. In response to the Panama Papers, the Commission reinforced its CBCR proposal; it results in the proposal in a higher level of transparency for taxes paid by multinational companies in jurisdictions posing specific tax challenges.
This alert presents the main elements of the CBCR proposal and its wider policy implications.
Please click on the file below to read the full Client Alert.
