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Corporate tax: MEPs welcome plan for information sharing by national authorities

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13/05/2016
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The European Commission's proposal for automatic exchange of corporate tax information among national tax authorities was welcomed by Parliament on Thursday as "a positive step in the fight against aggressive corporate tax planning". But MEPs also advocated adding further safeguards in the text to ensure that competition in the single market is not distorted by advantageous national tax deals with multinationals.

The report by Dariusz Rosati (EPP, PL), approved by 567 votes to 30 with 53 abstentions, sets out Parliament's recommendations to EU member states, which would have to decide unanimously on the Commission's proposal.

The proposal would oblige multinational firms with total consolidated revenues of €750 million or more to file a country-by-country report in the EU member state in which the ultimate parent entity of the group is resident for tax purposes. That member state should then share this information with other member states where the company operates. Information to be reported includes revenues, profits, taxes paid, capital, earnings, tangible assets and the number of employees.

"This first legislative proposal in the Commission's Anti-Tax Avoidance Package is an important step in the fight against unfair tax practices in the EU. It should enhance transparency and reduce harmful tax competition. This cannot be achieved by individual member states; it requires common action. If this to be taken up effectively, the Commission should be included in the exchange of country-by-country reporting", said Mr Rosati.

Full access for the Commission

MEPs insist that the Commission should have full access to the information exchanged among member states' tax authorities, to enable it to assess whether member states’ tax practices comply with EU rules on state aid. This is especially important for small and medium sized enterprises that operate in one country only. "These companies usually pay an effective rate of tax that is much closer to statutory rates than multinational firms. (..) Domestic companies should not face disadvantages due to their size or lack of cross-border trade", the text says.

Sanctions

The directive will set deadlines of 12 months after the close of the fiscal year for filing, and a further three months for automatic exchange. In order to ensure that the reporting obligation is enforced, MEPs want member states to introduce sanctions to be imposed on multinational companies that fail to file their country-by-country report.

Next steps

EU member states agreed their stance on the proposal on 8 March, pending the European Parliament opinion and the lifting of reservations of national parliaments. The Council would have to approve the decision formally at one of its upcoming meetings.