Dear Commissioner Hogan,
Ahead of the vote on the European Commission’s proposal on public tax transparency by the College of Commissioners, we wish to highlight the importance of such a measure and call on you to vote in favour of it.
This is a crucial moment in the fight for inclusive and equitable growth and against extreme inequality and poverty both at home and in developing countries. In the last year, the European Commission has strongly committed to tackle tax evasion and tax avoidance. It has now a major opportunity to turn such commitment into reality by adopting public country-by-country reporting (CBCR) as soon as the impact assessment on corporate tax transparency is finalised.
Corporate tax avoidance has a huge impact on the lives of citizens in the EU and around the world. The problem that lies at the heart of the matter is that multinationals do not have to publish basic country-level information about where they employ people, have subsidiaries, declare profits, or pay taxes. Instead, they publish annual financial reports on an aggregate basis, which allows some companies to hide the fact that they are moving profits to low- or zero-tax jurisdictions to lower their tax liability.
One of the most efficient measures to address this issue is tax transparency. The current proposal of mandatory CBCR aiming to implement Action 13 of the guidelines on Base Erosion and Profit Shifting (BEPS) by the Organisation for Economic Cooperation and Development (OECD) is a first step. However, the proposed CBCR model foresees the sharing of information only between tax authorities. Real transparency means that information is publicly disclosed and accessible to citizens, journalists and policy makers.
Moreover, the EU’s internal market will also benefit from publicly available information, exposing possible unfair advantages of multinationals over small and medium enterprises (SMEs). Most importantly, public disclosure would have a stronger deterrent effect for multinational companies to engage in questionable tax planning practices.
Recent state aid rulings by the Commission against Belgium, the Netherlands and Luxembourg show the existence of secrecy jurisdictions within the EU. Ending the opacity surrounding the activities and tax payments of multinationals is a crucial step towards curbing corporate tax avoidance and re-establishing public trust in our tax systems, while helping flag corruption risks. We believe that citizens, including those in developing countries, have the right to have access to key financial information on the activities of the companies that operate in their territories.
There is currently a proposal on the table to include public CBCR for all sectors in the Shareholders’ Rights Directive. Adopting this directive would ensure greater time saving and simplification of the legislative process. If the EU seeks to lead by example on this important matter, as recently highlighted , we urge you to show your strong support for the transparency of multinational companies’ activities and tax practices by voting in favour of public CBCR on April 12, and supporting the introduction of such a measure for all sectors.
Siobhán McGee, Chief Executive Officer, ActionAid Ireland
Rosamond Bennett, Chief Executive Officer, Christian Aid Ireland
Éamonn Meehan, Executive Director, Trócaire
Jim Clarken,Chief Executive Officer, Oxfam Ireland
Claudine Gaidoni, Representative, Attac Ireland