A majority of European Council members have today supported the EU country-by-country reporting directive in an important step towards tax transparency.
ActionAid is among the civil society organisations that have been campaigning for the directive aimed at addressing tax avoidance and ending the secrecy surrounding multinational corporations’ overseas operations and accounts, which has been held up in the European Council since 2016.
Julia Sánchez, Secretary General of ActionAid International, says:
“This is a major step towards tax transparency. Developing countries lose more than US$100 billion a year due to multinationals’ tax dodging. This is robbing communities of vital revenue for public investment in health, education, climate action and other public services that support women, girls and other marginalised groups.
“Bringing transparency to the accounts of multinational companies will allow governments, the media, civil society and researchers to scrutinize the tax bills of these corporations and demand they pay taxes where they make their profits.”
Recent ActionAid research revealed how 20 developing countries could be missing out on as much as US$2.8 billion in tax revenue from Facebook, Alphabet Inc. and Microsoft due to unfair global tax rules. This directive will allow for better scrutiny of corporate tax tricks in the future.
The directive will now continue to be negotiated between the EU Council, EU Commission and the European Parliament to decide critical elements of the legislation.
ActionAid is calling for reporting information to be listed separately for each tax jurisdiction across the world where a company has economic activity. This will allow developing countries and tax justice activists to access information about the profits made by multinationals in the Global South and see how much tax they pay compared to the resources they extract and potentially huge profits they make.
ActionAid believes the directive should cover all multinationals qualified under EU rules to be ‘large undertaking’, with a threshold of €40million in net annual turnover. The suggested threshold of €750million in the current draft allows too many large companies to get away with hiding their profits and tax practices.
Ms Sánchez adds: “For decades, multinationals have used tax loopholes and tax avoidance tricks to dodge paying their fair share. This landmark directive must not be watered down and fall prey to corporate lobbyists to insert loopholes and excuses for not publicly disclosing their profits and turnovers country by country.”
For more information and interviews contact email@example.com or call +447795642990.