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Under S&D leadership, European Parliament to adopt pioneering financial transparency rules

Date

12 Nov 2021

Sections

Euro & Finance

Today, the European Parliament will adopt a law on public country-by-country reporting (pCBCR), which will compel large multinationals to financial transparency and publish in which countries they make their profits and where they pay their taxes. The new law includes the obligation for companies to publish how many full-time employees they have, their turnover and taxes paid, as well as all profits and losses they have in each country they operate in, inside the European Union and in tax havens.

As part of our tax justice campaign, the Socialists and Democrats have led the drive for public country-by-country-reporting. After the dossier had been blockaded by some member states in the Council for five years, in June 2021, S&D MEPs and Parliament negotiators Evelyn Regner and Ibán García del Blanco could finally close a successful deal under the Portuguese Presidency on meaningful financial transparency, considerably improving the Commission proposal. This law is the first of its kind globally that will make currently undisclosed information publicly available.

Evelyn Regner, S&D MEP and Parliament negotiator on pCBCR, said:

“The new law on public country-by-country reporting will finally oblige large multinational companies to publicly disclose where they make their profits and where they pay their taxes. This will not only boost investors’ appetites - which is of particular importance given that we need investment more than ever to relaunch our struggling economies - but also empower public scrutiny of known tax-dodgers such as Apple and Amazon. Thanks to the new rules, we will know which companies are free-riding and which are contributing their fair share to society.

“As we managed to include publication requirements for third countries listed on the EU’s grey or black lists of tax havens, the new law on public country-by-country reporting will boost our fight against tax havens.

“I am proud that we have managed to close a loophole through which non-European companies could have escaped the new rules by simply filing an explanation. On EU soil, the same rules must apply to EU and non-EU companies.”

Ibán García del Blanco, S&D MEP and Parliament negotiator, said:

“For five years, the Parliament led by the S&D Group, has been fighting for meaningful public country-by-country reporting, while some EU governments put on the brakes. The new law adopted today by the European Parliament is a major step towards more corporate transparency and contains a number of notable improvements.   

“During the negotiations, we managed to include the requirement that companies will have to report all their full-time employees and list all subsidiaries. This will make it much harder for companies to blow smoke and conceal their real economic activities in each country.

“To truly empower public scrutiny, the data must be fully available and easily accessible. We fought for and obtained that the data will be free of charge, in an open format and in a common template.

“The Pandora Papers have again proven that we urgently and rapidly need public country-by-country reporting. We deeply regret that EU governments were not willing to support our demand for a global disaggregation of data at this point in time, which is a long-standing priority of the Parliament. Yet, we did manage to include a strong review clause to continue the battle on global disaggregation of the information and limit the effects of the safeguard clause, which will allow companies to avoid reporting to protect their commercial interests. We are proud of what we could achieve and we are determined to make public country by country reporting even more ambitious in the upcoming review.”

Note for the editor:

In the wake of the Panama Papers, in April 2016, the European Commission proposed legislation on corporate tax transparency, commonly referred to as public country-by-country reporting (pCBCR) for multinationals, which would require large multinational companies with an annual turnover of more than €750 million to publish an annual public report disclosing where they do business, make profits and how much they pay in taxes and other payments, for each country where they operate. This measure would complement the existing legislation on automatic exchange of tax information and introduces accountability of the multinational to the public and all other taxpayers.

In July 2017, the European Parliament adopted its mandate for the inter-institutional negotiations, so-called trilogues. For five years, the Council was blocked by a number of countries opposing the proposal. On 24 October 2019, the European Parliament passed a strong resolution urgently calling on the member states to break the deadlock within the Council, conclude their first reading on public CBCR and enter inter-institutional negotiations with Parliament. The Portuguese Council Presidency finally managed to break the deadlock, which led to a political deal on public country-by-country reporting in June 2021. Today, the full plenary of the European Parliament is set to adopt the new law.

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