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S&Ds worry about business influence on financial transparency after business organisation’s meddling in draft law revealed

Date

23 Apr 2021

Sections

Euro & Finance

Reacting to the revelations in the French online media Contexte this morning that French business organisation Medef, affiliated to Business Europe, partially drafted a non-paper on financial transparency law, aimed at allowing public scrutiny on corporate income tax and fostering corporate responsibility, for the French ministry of economy, the Socialists and Democrats in the European Parliament  worry about the business influence on this crucial file and call on the French government to clarify its position.

The so-called public country-by-country-reporting (pCBCR) would oblige big multinationals to disclose where they make their profits and where they pay their taxes. If the red lines proposed in the French paper were to be adopted, they would considerably water-down the directive’s objective of ensuring meaningful fiscal transparency and corporate responsibility. This revelation comes ahead of a crucial round of negotiations between EU governments, the EU Commission and the European Parliament this afternoon.

Evelyn Regner and Ibán García del Blanco, S&D MEPs and Parliament negotiators for the public-country-by-country-reporting file, said:

“We were shocked to learn that a business organisation is defining the negotiating position on EU laws for the French Ministry of Economy. But even worse, if adopted, these proposals would seriously compromise the EU’s financial transparency law. We could end up with a blunt weapon in the fight against tax avoidance and with a weak tool for investment. The whole point of this law is to oblige big multinationals to disclose where they make their profits and where they pay their taxes to allow for an appropriate public scrutiny. To ensure meaningful financial transparency, we need to know how many full-time employees, related and unrelated party turnover, all profits and losses, as well as the subsidies received by a government’s multinationals in each country where they operate - in and outside of the EU. Publishing the information for operations in third countries in an aggregated fashion and delaying publication for six years, beats the purpose. Under the guise of protecting big multinationals from competition, they are giving a helping hand to aggressive tax planning.

“We call on the French Government to clarify its position to prove that they are really committed to delivering a meaningful transparency tool for their citizens.”

Aurore Lalucq, S&D MEP and spokesperson for tax matters, added:

“Instead of heeding citizens’ calls for greater financial transparency, the French government is catering to the special interests of business organisations. And if this wasn’t bad enough, this move to keep the fiscal arrangements of big players in the dark comes while the first ever global digital tax and first ever global effective minimum tax rate are in the making within the OECD.  With his 21% proposal and national tax reform plans, President Biden is leading by example. I call on the French government to show leadership on financial and corporate transparency. It is high time to shed light on the opaque system of letterboxes, aggressive tax planning and dodgy law-firms. Now that governments are again helping out companies with public money to cope with the pandemic, taxpayers have more right than ever to know which big multinationals are playing fair and which are moving their gains into tax havens. Impunity for tax avoiders must finally end.”

Note to the editor:

After 5 years of a number of EU member states blocking progress, there were signs of movement again for the pCBCR when the Portuguese EU Presidency tabled the file in February. A crucial round of negotiations among the EU lawmakers will take place later this afternoon where the key issues of a potential 6 year delay for publishing information such as the number of full-time employees, fixed assets and capital, net turnover, all profits and losses, as well as subsidies received by a governments multinationals in each country of operation in the EU and in third countries, will have to be agreed on.

 

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