Tax transparency – automatic exchange of information on base erosion and profit shifting: Implementation Appraisal

12-04-2016

Although the provisions of the existing Directive 2011/16 require an automatic exchange of information in the field of taxation, the Commission's new proposal would go further towards strengthening and broadening administrative cooperation in this field. The proposal establishes broader cooperation between the MS with regard to preventing tax evasion and tax fraud by multinational enterprises. In this context it obliges multinational enterprises to provide country-by-country reports to national tax authorities. Failure to provide these reports may lead to sanctions. The national tax authorities can subsequently exchange the reports with tax authorities of other Member States. The proposal also introduces a new set of obligations for the application of a mandatory automatic exchange of information in the field of taxation, especially in the context of the principles adopted by the OECD in 2015 directed at prevention and combating base erosion and profit shifting by multinational enterprises.Parliament, as well as the European Economic and Social Committee, has repeatedly called for more actions to be taken in the tax field to enhance transparency and combat tax evasion and tax fraud. Furthermore, the abovementioned studies and the OECD final reports on base erosion and profit shifting have pointed to a need for coordinated actions to combat tax evasion and tax fraud. As these negative practices are burdensome for the European and world economy, broadening administrative cooperation between MS and clearly defining  obligations for MS and enterprises, such as foreseen in the new Commission proposal,  could support these aims.

Although the provisions of the existing Directive 2011/16 require an automatic exchange of information in the field of taxation, the Commission's new proposal would go further towards strengthening and broadening administrative cooperation in this field. The proposal establishes broader cooperation between the MS with regard to preventing tax evasion and tax fraud by multinational enterprises. In this context it obliges multinational enterprises to provide country-by-country reports to national tax authorities. Failure to provide these reports may lead to sanctions. The national tax authorities can subsequently exchange the reports with tax authorities of other Member States. The proposal also introduces a new set of obligations for the application of a mandatory automatic exchange of information in the field of taxation, especially in the context of the principles adopted by the OECD in 2015 directed at prevention and combating base erosion and profit shifting by multinational enterprises.Parliament, as well as the European Economic and Social Committee, has repeatedly called for more actions to be taken in the tax field to enhance transparency and combat tax evasion and tax fraud. Furthermore, the abovementioned studies and the OECD final reports on base erosion and profit shifting have pointed to a need for coordinated actions to combat tax evasion and tax fraud. As these negative practices are burdensome for the European and world economy, broadening administrative cooperation between MS and clearly defining  obligations for MS and enterprises, such as foreseen in the new Commission proposal,  could support these aims.