Commission’s selective tax transparency proposal leaves most of the world in the dark
The European Commission has missed yet another chance to effectively end tax havens, campaigners say. Today’s proposal on tax transparency limits public country-by-country reporting to the EU and an arbitrary list of tax havens. This makes it impossible to effectively combat tax havens which have been at the center of scandals like the Panama Papers, LuxLeaks or OffshoreLeaks. Also, the EU executive’s proposal will only apply to a very small number of companies.
Oxfam's EU tax policy advisor, Aurore Chardonnet, said:
“The European Commission finally recognizes tax transparency as a powerful tool to fight tax avoidance. But today’s proposal is not country-by-country reporting, which is what's needed. It appears the European Commission is more interested in saving face after the Panama Papers, instead of actually fixing the broken tax system.
“The Commission's proposal only requires reports for EU member states and countries on what is likely to be an arbitrary list of tax havens. The Commission criteria to list tax havens are already absolutely vague, and we also expect EU member states to delay or oppose the process of compiling an official EU list. A much simpler solution would be big companies disclosing basic information for all countries they operate in.”
Financial Transparency Coalition’s Lead EU Advocate, Koen Roovers said:
“Sadly, it took yet another massive leak to bring the collective world’s attention to the harm of financial secrecy and tax abuse. The European Commission has an opportunity to lead the way on corporate transparency, so it’s disappointing that their proposal fails to include global public country-by-country reporting for companies doing business in the EU. Instead they settled for a half-hearted hybrid that would keep most of the world in the dark.”
ActionAid’s EU tax advocacy officer, Kasia Szeniawska said:
”The European Commission’s proposal, presented today, falls far short of what is needed to lift the veil of opacity that shrouds corporate tax deals. It is this opacity which enables multinational companies, to avoid tax in some of the world’s poorest countries as well as in the EU itself.
The proposal lets off the hook the vast majority of multinational companies by setting a very high threshold for companies covered by the requirement. Also, the Commission misses the whole point of public country-by-country reporting when it suggests limiting the reporting to EU countries and a yet-to-be-agreed list of tax havens, which is likely to be selective and highly politicized. The result is that citizens, journalists and campaign groups won’t get the information they need to scrutinize multinationals’ global tax affairs, and there’s no assurance that the world’s poorest countries will get the information either.
The European Parliament and the EU Member States should strengthen the proposal by ensuring that it covers all large multinationals, not only the biggest ones, and that it requires them to publish their tax information for all countries where they are present. The Panama Papers show that another half–hearted attempt to tackle tax avoidance simply isn’t good enough."
Tove Ryding Tax Justice Coordinator at the European Network on Debt and Development (Eurodad) said:
"As long as the proposal doesn't cover all countries, multinational corporations will still have plenty of opportunities to hide their profits. So instead of solving the problem, this proposal would be moving the problem from one country to another, with multinationals still able to avoid taxes. We urge the European Member States and the Parliament to reject it and replace it with a meaningful proposal that delivers genuine public country by country reporting."
Alvin Mosioma, Executive Director, Tax Justice Network - Africa:
"It's unfortunate that the European Commission failed to deliver full country-by-country reporting that could actually be of use outside of Europe," said Alvin Mosioma, Executive Director of the Tax Justice Network - Africa. "This means multinationals will still be able to exploit the secrecy afforded to them in other regions, as they still won't need to disclose data on countries across the African continent, throughout Asia, and the Americas."
- This is a joint reaction from the Financial Transparency Coalition, Oxfam, the European Network on Debt and Development, and ActionAid.
- Photos of today illustrating a tax haven on Rondpoint Schuman in Brussels are available and can be used by the media for free.
- Campaigners have been calling for a strong public country-by-country reporting which would require multinational companies to disclose a breakdown of the following figures: profits earned, taxes owed and taxes paid, number of employees and turnover, as well as an overview of their economic activity in every country where they have subsidiaries, including offshore jurisdictions. While such a measure would allow for real tax transparency, the Commission proposal is far less ambitious.
- The European Parliament has voted for a stronger public CBCR proposal within the Shareholders Rights Directive. This directive is currently under trilogue negotiations.
- Banks in the EU are already required to disclose country-by-country tax reports. Companies in the extractive and logging industries have to publish their payments to governments relating to the exploitation of natural resource on a country-by-country basis.
- An Oxfam report on country-by-country reporting by French banks revealed the very prominent role of tax havens for these companies.
- The use of tax havens is becoming increasingly commonplace - 9 out of 10 of the world’s top 200 companies have a presence in at least one tax haven while corporate investment in tax havens quadrupled between 2001 and 2014, a recent Oxfam report shows.
- The “World Investment Report” of the United Nations Conference on Trade and Development (UNCTAD) estimates that developing countries lose at least USD 100 billion per year in corporate tax revenue due to tax dodging by large companies.
Oxfam | Florian Oel | firstname.lastname@example.org | t +32 2 234 11 15 | m +32 473 56 22 60
Eurodad | Julia Ravenscroft | email@example.com | m +32 486 356 814
ActionAid | Juan Leahy | Juan.Leahy@actionaid.org | t +44 20 3814 4942 | m +44 7834 216 458
Financial Transparency Coalition | Christian Freymeyer | firstname.lastname@example.org | t +1 410 490 6850
Tax Justice Network - Africa | Kwesi Obeng | email@example.com | +233. 272.879.377