Publishing corporate tax information. A proposal to amend Directive 2013/34 on the disclosure of income tax information by certain undertakings and branches

This briefing is one in a series of 'Implementation Appraisals' on the operation of existing EU legislation in
practice. Each such briefing focuses on a specific EU law which is likely to be amended or reviewed, as foreseen in the European Commission's Annual Work Programme.

Implementation Appraisals aim to provide a succinct overview of material publicly available on the implementation, application and effectiveness of an EU law to date – drawing on available input from the EU institutions and external
organisations. They are provided to assist parliamentary committees in their consideration of the new proposals, once tabled.The current proposal on publishing corporate tax data is part of a broader effort to tackle tax avoidance and increase tax transparency. The proposal is closely connected to the recently adopted changes to Directive 2011/16 on the automatic exchange of information among national tax authorities.

Country-by-country reporting to tax administrations is included in the OECD's action plan for tackling tax avoidance. However, while the present proposal applies the same turnover threshold and covers the same businesses as the OECD plan, it goes somewhat further as it adds an obligation to disseminate tax information publicly.

The European Parliament has long called for tax information to be made public, however, this proposal does not go as far as Parliament had recommended in previous resolutions on the topic, particularly, in terms of the data that will be made public. There is already some EU-wide experience of making corporate tax-related data public with the recent decision to mandate the banking sector to publish tax-related data.

The full impact of this measure is still unclear as several years of data will be needed to properly track tax planning behaviour. However, the European Commission's evaluation on the subject has not yet found any negative impacts of publishing tax-related data.

When it comes to what public scrutiny would achieve, there is not as yet an abundance of evidence on the effect of potential reputation-related damage on large businesses' tax strategies. Public disclosure will centre on businesses' tax payments within the EU, which means that it will not necessarily be possible to gain an overview of a business's total tax position. This will have some effect on the analysis that can be made of businesses' tax related information. However, the proposal sends a strong message in relation to the need for additional transparency.

Author: Gertrud Malmersjo

EP: EPRS: Briefing: Implementation Appraisal: Ex-ante Impact Assessment http://www.europarl.europa.eu/thinktank/en/search.html?policyAreas=EXIMAS

ESO: Background information: Proposal for a Directive of the European Parliament and of the Council amending Directive 2013/34/EU as regards disclosure of income tax information by certain undertakings and branches http://www.europeansources.info/record/proposal-for-a-directive-of-the-european-parliament-and-of-the-council-amending-directive-2013-34-eu-as-regards-disclosure-of-income-tax-information-by-certain-undertakings-and-branches/

EP: EPRS: Briefing: Initial Appraisal of a European Commission Impact Assessment, July 2016: Publishing corporate tax information. Country-by-country reporting for multinational enterprise groups http://www.europarl.europa.eu/RegData/etudes/BRIE/2016/581420/EPRS_BRI(2016)581420_EN.pdf

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