At its recent Plenary session in Strasbourg the European Parliament voted to back a proposal requiring multinational companies to report their tax bills on a country-by-country basis.
The aim is to increase tax transparency and to provide the public with a picture of the taxes paid by multinationals and where those taxes are paid.
The proposed legislation requires multinational firms with a worldwide turnover of €750m or more to publish their income tax information in a common template in each tax jurisdiction in which the firm or its subsidiary was operating. This data would be available for free and made publicly accessible on the website of the firm.
The company would also be responsible for filing a report in a public registry managed by the European Commission. The information would include the number of employees, amount of net turnover, stated capital, amount of income tax paid and amount of accumulated earnings.
However MEPs also supported measures to protect commercially-sensitive information by allowing EU member states to grant exemptions from the requirement to provide one or more pieces of information. The list of firms granted exemptions would be published on the European Commission’s website.
The European Parliament also supported amendments that would set limits on exemptions won by firms on providing their tax information.
Sajjad who is the ECR spokesman on the Legal Affairs Committee commented
“We’ve ensured that EU based firms are not unfairly disadvantaged by forcing them to disclose commercially sensitive or harmful information as they’ll be able to apply to omit certain data from their public reports,” “Whilst these proposals are not perfect, they are a positive step forward towards greater accountability and transparency of multinationals. The issue of ensuring that taxes are paid where the business is made is a concern in all Member states and this proposed legislation should improve public trust in global companies.
“The draft proposal was approved by 534 votes to 98 votes, with 62 abstentions. Now the report is heading to the Committees to start negotiations in 1st reading on the basis of a plenary mandate.”