European Parliament Committee Sets the Tone for Europe’s Debate on Multinational Transparency

Amid public outcry on tax dodging, Parliamentarians respond with concrete measures to level the playing field

Issued by Transparency International Liaison Office to the European Union



In another move that places Europe at the forefront of the financial transparency wave, the Legal Affairs (JURI) Committee of the European Parliament voted in favor of a Shareholders Rights Directive that includes a requirement for multinational corporations (MNCs) to publicly report financial information on a country by country level.

“Up until now, we’ve had to rely on leaks, whistleblowers, and secret documents to learn if a multinational is engaging in aggressive tax planning and profit shifting,” said Koen Roovers, Lead EU Advocate for the Financial Transparency Coalition. “But today’s vote brings the transparency Europe needs closer to reality.”

In the wake of the LuxLeaks scandal, which exposed hundreds of MNCs that had entered into secret tax deals with the government of Luxembourg, there has been a renewed public focus on corporate transparency and tax dodging.

Public country by country reporting (CBCR) would require MNCs to disclose things like the amount of profit made, taxes paid, revenue generated and number of employees for each country where a subsidiary operates. Right now, MNCs report on their operations in one consolidated global report, without any way of discerning country specific operations.

“This kind of detailed corporate reporting can help to flag up possible corruption by shedding a light on special arrangements between companies and governments.” said Nienke Palstra, Senior Policy Officer with Transparency International EU. “It will also improve the accountability of companies to the citizens of the countries where they make their profits.”

The vote comes as the European Commission begins an assessment of the benefits of CBCR as part of the EC’s tax transparency package. The package also called for the exchange of tax rulings between European countries, something that’s currently kept secret. Some sectors of the economy already have to report this information.

“Large European banks are already making this information available to the public and this is not having any negative impact on their competitiveness”, says Catherine Olier, Oxfam’s EU policy advisor. “If banks are opening their own books, why shouldn’t other big companies do the same at a time when European citizens are fed up with unfair corporate tax dodging?”

“Companies that are operating in one jurisdiction already report this type of information, so it’s not only a question of transparency,” said Tove Ryding, Eurodad’s tax justice advocacy manager. “It’s about creating a level playing field between small and medium enterprises and their transnational competitors,” added Ryding.

Tax authorities aren’t the only ones that want this information, either. Investors need the very same knowledge; knowing if a corporation is operating in unstable areas, using tax havens, or engaging in the type of aggressive tax planning that can ruin a reputation are vital to making sound business investments.

Notes to the Editor:

  1. The vote comes as the European Commission begins an assessment of the benefits of CBCR and in the wake of the EC’s tax transparency package, which called for the exchange of tax rulings between European countries, something that’s currently kept secret. Some sectors of the economy already have to report this information.
  2. The ALDE group invoked a rule of procedure at the end of the vote, requesting to send the report to plenary. The European Parliament’s leadership, the Conference of Presidents, will decide whether or not to put it on the agenda.
  3. The European Parliament has repeatedly called for greater transparency around the activities of multinational corporations, for instance in the 2014 Tax Report (rapporteur Kaili) that was adopted in March this year and the report on the Fight against Tax Fraud, Tax Evasion and Tax Havens (rapporteur Kleva-Kekuš) of May 2013.


For any press enquiries please contact

Koen Roovers – Financial Transparency
+32 (0) 4 9750 9871
.(JavaScript must be enabled to view this email address)

Nienke Palstra – Transparency International EU
+32 (0) 2 893 24 58
.(JavaScript must be enabled to view this email address)

Angela Corbalán – Oxfam International
+32 (0) 473 56 22 60
.(JavaScript must be enabled to view this email address)

Latest

Support Transparency International

Blog: Gender and corruption: where do we go from here?

While corruption and gender have become increasingly prominent on the global agenda, and it’s increasingly recognized that anti-corruption measures are central to reducing the gender gap, the pace of change has so far been glacial. Urgent action is needed, but is sorely lacking.

Blog: Verifying the beneficial owner of companies. Why and how.

While existing rules emphasise the need for accurate, reliable and up-to-date beneficial ownership information, verification of information provided by companies is often minimal, when it happens at all.

Troika Laundromat signals a different kind of financial crisis

The Troika Laundromat investigation shines a spotlight on a cast of new and familiar characters in the ongoing saga surrounding flows of dirty money through the world’s financial system.

الأبعاد الخطيرة للتعديلات الدستورية المقترحة في مصر

يتأهب نواب البرلمان المصري للمصادقة على سلسلة من التعديلات الدستورية، التي ستؤدي في حال تمريرها إلى ترسيخ مزيد من السلطة بيد الرئيس، وتنصيب الجيش مجددا كأعلى سلطة في البلاد.

The alarming message of Egypt’s constitutional amendments

Parliamentarians in Egypt look set to approve a series of constitutional amendments this week that, if passed, would consolidate power in the office of the president, while restoring the military as the ultimate authority in the country.

Восточная Европа и Центральная Азия: слабая система сдержек и противовесов

Индекс восприятия коррупции (ИВК) за этот год представляет печальную картину касательно мер по борьбе с коррупцией в Восточной Европе и Центральной Азии. За несколько лет в этом регионе был достигнут очень незначительный прогресс в борьбе с коррупцией.

الشرق الأوسط وشمال أفريقيا: انتشار الفساد في ظل ضعف المؤسسات وتراجع الحقوق السياسية

كشف مؤشر مدركات الفساد 2018 عن صورة قاتمة لواقع الشرق الأوسط وشمال أفريقيا حيث أن معظم بلدان المنطقة قد أخفقت في مكافحة الفساد على الرغم من أن قلة قليلة من البلدان قد أحرزت تقدما تدريجيا.

Afrique subsaharienne:Les régimes non démocratiques sapent les efforts de lutte contre la corruption

L’Indice de perception de la corruption (IPC) présente cette année un tableau bien sombre de l’Afrique : seuls 8 pays sur 49 obtiennent un score supérieur à 43 sur les 100 points que compte l’Indice. Malgré l’engagement pris par les dirigeants africains de faire de 2018 l’Année africaine de lutte contre la corruption, les avancées concrètes se font encore attendre.

Trouble at the top: why high-scoring countries aren’t corruption-free

For the third year running, the top seven countries in the Corruption Perceptions Index 2018 consist of the four Nordic nations – Denmark, Finland, Sweden and Norway – plus New Zealand, Singapore and Switzerland. Yet that doesn’t mean that these countries are corruption-free.

Social Media

Follow us on Social Media