Publishing corporate tax information: Implementation Appraisal

04-07-2016

The current proposal on publishing corporate tax data is part of a broader effort to tackle tax avoidance and increase tax transparency. The proposal is closely connected to the recently adopted changes to Directive 2011/16 on the automatic exchange of information among national tax authorities. Country-by-country reporting to tax administrations is included in the OECD's action plan for tackling tax avoidance. However, while the present proposal applies the same turnover threshold and covers the same businesses as the OECD plan, it goes somewhat further as it adds an obligation to disseminate tax information publicly. Parliament has long called for tax information to be made public, however, this proposal does not go as far as Parliament had recommended in previous resolutions on the topic, particularly, in terms of the data that will be made public. There is already some EU-wide experience of making corporate tax-related data public with the recent decision to mandate the banking sector to publish tax-related data. The full impact of this measure is still unclear as several years of data will be needed to properly track tax planning behaviour. However, the Commission's evaluation on the subject has not yet found any negative impacts of publishing tax-related data. When it comes to what public scrutiny would achieve, there is not as yet an abundance of evidence on the effect of potential reputation-related damage on large businesses' tax strategies. Public disclosure will centre on businesses' tax payments within the EU, which means that it will not necessarily be possible to gain an overview of a business's total tax position. This will have some effect on the analysis that can be made of businesses' taxrelated information. However, the proposal sends a strong message in relation to the need for additional transparency.

The current proposal on publishing corporate tax data is part of a broader effort to tackle tax avoidance and increase tax transparency. The proposal is closely connected to the recently adopted changes to Directive 2011/16 on the automatic exchange of information among national tax authorities. Country-by-country reporting to tax administrations is included in the OECD's action plan for tackling tax avoidance. However, while the present proposal applies the same turnover threshold and covers the same businesses as the OECD plan, it goes somewhat further as it adds an obligation to disseminate tax information publicly. Parliament has long called for tax information to be made public, however, this proposal does not go as far as Parliament had recommended in previous resolutions on the topic, particularly, in terms of the data that will be made public. There is already some EU-wide experience of making corporate tax-related data public with the recent decision to mandate the banking sector to publish tax-related data. The full impact of this measure is still unclear as several years of data will be needed to properly track tax planning behaviour. However, the Commission's evaluation on the subject has not yet found any negative impacts of publishing tax-related data. When it comes to what public scrutiny would achieve, there is not as yet an abundance of evidence on the effect of potential reputation-related damage on large businesses' tax strategies. Public disclosure will centre on businesses' tax payments within the EU, which means that it will not necessarily be possible to gain an overview of a business's total tax position. This will have some effect on the analysis that can be made of businesses' taxrelated information. However, the proposal sends a strong message in relation to the need for additional transparency.