Survival of the Richest

Europe's role in upholding an unjust tax system
The €750 million threshold stems from the OECD’s BEPS
project, 155 which deals with secret country by country
reporting and was adopted by the EU and proposed by
the Norwegian government in May 2016. 156 From 2017, EU
governments will require companies (with a consolidated
annual turnover of €750 million or more) to submit full
country by country reports to the tax authorities in the
country where their headquarters are located (or where a
European subsidiary is located, if the headquarters are not
based in the EU). Tax authorities around the world are then
supposed to exchange this information with each other on
a regular basis. Although this secret country by country
reporting can be a helpful tool for tax administrations to
make sure that multinationals are paying their fair share,
it will not allow citizens, journalists or parliamentarians
access to the information so that they can hold multinational
corporations and governments to account.
Furthermore, as explained earlier, there is a real risk
that developing countries will not be able to receive the
information automatically. In fact, the Commission’s impact
assessment for public country by country reporting indicates
that the EU countries might not be planning to exchange
country by country reports with all governments. According
to the assessment, fully public CBCR would involve ‘the
risk that third country tax authorities seek tax adjustments
on third country operations’. 157 This could be interpreted
as suggesting that the EU Member States are not really
planning to exchange the secret country by country reports
automatically with all other governments. If they were, there
should not be any difference on this point between public
and secret reporting – the ‘third countries’ should receive the
reports anyway through the automatic information exchange.
Less than 1%: The tax rate agreed
between some multinational
corporations and Luxembourg
LuxLeaks, 2014
The argument that country by country reports should be
kept secret to avoid third country (including developing
country) tax administrations seeking ‘tax adjustments’ is
highly problematic. In plain English, it would seem that
the reason why the European Commission is arguing for
keeping the information from a number of third countries,
including developing countries, is that the EU wants to
protect its multinationals from having to pay more taxes in
these countries. This would be a highly problematic stance
for the EU to take, as it would go squarely against the its
own principles of policy coherence for development. 158 It
would essentially mean that the Commission is refusing to
support developing countries in their efforts to collect their
fair share of taxes from multinationals.
The proposal on public CBCR will be negotiated by
the European Parliament, the Commission and the EU
Member States over the coming months. The European
Parliament has previously supported public country by
country reporting that would require companies to publish
information from all countries. 159 In fact, the Parliament
already put foward its own proposal for public CBCR in
July 2015 as an amendment to the Shareholders’ Rights
Directive, 160 which is still under negotiation between the
Parliament and the Council. However, it is likely that these
negotiations will now instead take place as part of the
decision making process on the Commission’s proposal
from April 2016.
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