The EU and its member states should make multinationals report their financial performance, tax details, assets and employee numbers country by country, so as to help fight tax evasion and illicit money flows in developing countries, says Parliament in a non-binding resolution voted on Wednesday. MEPs also call on EU financial institutions to ensure that companies receiving EU support do not “participate” in tax evasion.
"We now call on the Commission to put forward an ambitious action plan to support developing countries in fighting tax evasion and tax avoidance and in setting up fair, well-balanced, efficient and transparent tax systems, also with a view to the upcoming Conference on Financing for Development", said rapporteur Elly Schlein (S&D, IT). The resolution was passed by 550 votes to 57, with 23 abstentions.
"Better tax justice will help reduce inequalities and eradicate poverty, while also putting an end to tax havens for multinational companies, including European ones”, she added.
Report country by country
MEPs urge the EU and its member states to enforce the principle that listed or unlisted multinational companies in all countries and sectors, especially those extracting natural resources, must adopt country-by-country reporting (CBCR) as standard. This would require them to publish in their annual reports, for each territory in which they operate, the names of all subsidiaries, their financial performance, relevant tax information, assets and number of employees, and to ensure that this information is publicly available.
Member states should ensure that the administrative burdens involved are proportionate and that micro-enterprises remain excluded, says the text.
Make company ownership information public
Information on beneficial ownership of companies, trusts and similar institutions should be made publicly available in open-data formats, so as to prevent anonymous shell companies and comparable legal entities being used to launder money, finance illegal activities or terrorist activities, say MEPs.
No EU support for corporate tax evaders
EU financial institutions such as the European Investment Bank (EIB), the European Bank for Reconstruction and Development (EBRD) and institutions in the member states that fund development should monitor companies or other legal entities that receive support and ensure that they do not “participate” in tax evasion and avoidance by interacting with financial intermediaries established in offshore centres and tax havens or by facilitating illicit capital flows.
UN International conference on financing for development
MEPs urged parties to the 13-16 July UN conference in Addis Ababa on financing for development to deliver viable ways to finance the post-2015 global development agenda, which is to be decided at a UN summit in New York in September.
- Developing countries raise substantially less tax revenue than advanced economies
- Developing countries have tax-to-GDP ratios of 10% to 20%, as opposed to 30% to 40% in advanced OECD economies