Moren than 40 European NGOs write to their respective Ministers of Finance and to the European Commission to call for a strong outcome of the upcoming EU negotiations on public country by country reporting for multinational corporations under the Shareholders Rights Directive. Ending the secrecy surrounding the tax payments and economic activities of multinational corporations is a crucial step towards re-establishing public trust in our tax system. By requiring multinational corporations to report publicly on key financial data on a country by country basis, governments will also dramatically increase the incentive for these corporations to pay their taxes in the jurisdictions where the economic activity takes place and value is created. This is not only key to achieving financial stability and development in Europe, but also in the world’s poorest countries, where corporate tax avoidance is strongly undermining sustainable development and the fight against poverty, public country-by-country reporting is the most cost effective and efficient way of ensuring they have timely and low-cost access to this crucial information. Public country by country reporting will also help flag up corruption risks by shedding light on any special arrangements between companies and governments.
September 14, 2015 | GPF
Joint letter by European CSOs on Country-by-Country Reporting
Re: Upcoming EU negotiations on public country by country reporting for multinational corporations under the Shareholders Rights Directive
We, the undersigned civil society organisations, are writing to you to highlight the importance of the upcoming EU negotiations about public country by country reporting for multinational corporations.
We are strongly encouraged by the fact that the European Parliament, with a large majority, voted in favour of including public country by country reporting in the Accounting Directive, through their review of the Shareholders Rights Directive. The upcoming EU trialogue negotiations will be a key test of whether the European Union and its member states are ready to take action and solve the fundamental problems with the corporate tax system, which were exposed in a number of tax scandals, including the so called ‘Luxembourg Leaks’.
Ending the secrecy surrounding the tax payments and economic activities of multinational corporations is a crucial step towards re-establishing public trust in our tax system. By requiring multinational corporations to report publicly on key financial data on a country by country basis, governments will also dramatically increase the incentive for these corporations to pay their taxes in the jurisdictions where the economic activity takes place and value is created. This is not only key to achieving financial stability and development in Europe, but also in the world’s poorest countries, where corporate tax avoidance is strongly undermining sustainable development and the fight against poverty, public country-by-country reporting is the most cost effective and efficient way of ensuring they have timely and low-cost access to this crucial information. Public country by country reporting will also help flag up corruption risks by shedding light on any special arrangements between companies and governments.
Public country by country reporting will also have a number of other important benefits. It enables the public to make an informed judgement about a multinational corporations’ contribution to society, and provides valuable information to lawmakers to help them determine whether laws need to be changed to close loopholes in the tax system. It will also help investors identify risks, make informed decisions and hold multinational corporations to account. This will in turn increase the efficiency and financial stability of our economies. Lastly, by taking this crucial step towards repairing our tax system, governments can ensure a level playing field for our domestic enterprises, which cannot compete with multinational corporations that avoid taxation by shifting their profits into tax havens.
A year ago, the European Commission and PricewaterhouseCoopers conducted an impact assessment of public country by country reporting for the financial sector. The conclusion was that disclosing country by country reporting information “was unlikely to have a significant negative economic impact, and could have a small positive economic impact”. Following this finding, public country by country reporting was introduced for multinational corporations in the financial sector which now serves as an example how such a policy can work.
If country by country reporting information is kept confidential, the many benefits outlined above will not materialise. Furthermore, it will have the practical implication that citizens and tax authorities in the world’s poorest countries are unlikely to get access to the information they need to prevent corporate tax avoidance, which impacts them more relative to developed countries.
For these reasons, we urge you to show your strong support for the proposal to introduce public country by country reporting for multinational corporations during the negotiations over the Shareholders Rights Directive.
Yours sincerely,
- Ekvilib Institut
- Global Policy Forum
- WEED – World Economy, Ecology & Development
- Tax Justice Network
- Kepa
- Instytut Globalnej Odpowiedzialnosci
- ActionAid Denmark
- IBIS Denmark
- GLOPOLIS
- ActionAid International
- Attac Ireland
- Kairos Europe
- 11.11.11 - Koepel van de Vlaamse Noord Zuidbeweging
- Centre national de cooperation au développement CNCD-11.11.11
- KOO - Koordinierungsstelle der Österreichischen Bischofskonferenz für internationale Entwicklung und Mission
- VIDC- Vienna Institute for International Dialogue and Cooperation
- ATTAC Österreich
- Diakonia, Sweden
- Forum Syd, Sweden
- Netzwerk Steuergerechtigkeit
- Oxfam
- Transparency International Finland
- Transparency International Bulgaria
- Transparency International Romania
- Transparency International Czech Republic
- Transparency International Slovenia
- Transparency International Netherlands
- Transparency International Hungary
- Transparency International Italy
- Transparency International EU
- InspirAction, Spain
- Tax Research LLP
- Christian Aid
- Debt and Development Coalition Ireland
- Tax Justice Europe
- Re:Common, Italy
- European Network on Debt and Development (Eurodad)
- ShareAction
- Foi et Justice Afrique Europe
- ATTAC France
- The French Platform on Tax Haven
- CCFD-Terre Solidaire
- Peuples Solidaires ActionAid France
- Sherpa
- Justice et Paix
- Methodist Tax Justice Network, UK
- Financial Transparency Coalition
