MEPs get ready to lock horns in Council talks on tax disclosure for multinationals

MEPs will negotiate swift adoption of law committing multinationals earning €750 million in annual revenues, to declare all tax paid in each member stat

The European Parliament will start negotiations with EU governments for the swift adoption of a proposed law for the disclosure of income tax information by certain undertakings and their branches.

The public country-by-country reporting (CBCR) directive is expected to enhance corporate transparency of big multinational companies.

Member states will have two years to transpose the directive into national law.

The European Parliament adopted its position at first reading on 27 March 2019.

The EP has consistency called for increased tax transparency for companies and public CBCR with its special committees TAXE 1 and TAXE2 and the inquiry committee PANA.

The directive requires multinational enterprises or standalone undertakings with a total consolidated revenue of more than €750 million in each of the last two consecutive financial years, whether headquartered in the EU or outside, to disclose publicly in a specific report the income tax they pay in each member state, together with other relevant tax-related information.

Banks are exempted from the present directive as they are obliged to disclose similar information under another directive.

In order to avoid disproportionate administrative burdens on the companies involved and to limit the disclosed information to what is absolutely necessary to enable effective public scrutiny, the directive provides for an complete and final list of information to be disclosed.

The reporting will have to take place within 12 months from the date of the balance sheet of the financial year in question. The directive sets out the conditions under which a company may obtain the deferral of such disclosure for a maximum of six years.

It also stipulates who bears the actual responsibility for ensuring compliance with the reporting obligation.

The proposed directive, tabled in April 2016, is part of a European Commission action plan on a fairer corporate tax system.

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This article is part of a content series called Ewropej. This is a multi-newsroom initiative part-funded by the European Parliament to bring the work of the EP closer to the citizens of Malta and keep them informed about matters that affect their daily lives. This article reflects only the author’s view. The European Parliament is not responsible for any use that may be made of the information it contains.

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