CONCORD calls for more tax transparency.
Brussels, 4 December 2013
Subject: Tax transparency for multinational companies (’country-by-country reporting’)
To: EU Ministers
We are writing to you with regard to the current revision of the Accounting Directive in order to urge you to support the inclusion of public and mandatory disclosure of financial information for all large companies in Europe.
European Leaders agreed in May 2013 to implement this measure as a means to fight tax evasion and avoidance, which costs the European Union in all around €1 trillion a year. The current revision therefore represents a unique opportunity which (country) must support if the European Union is to live up to this commitment and remain at the forefront of international efforts to end tax dodging.
Hundreds of thousands of citizens and a great number of decision-makers, NGOs, businesses and academics have all declared their support for country-by-country reporting of tax and financial information for large multinationals in all sectors.
They want more transparency and greater corporate accountability so that we can see how some large companies move their profits away from where production takes place to low-tax jurisdictions, diminishing tax revenues for those states and societies where the company’s value is created and where the effects of pollution are felt.
Armed with this information, EU governments will be better equipped to stop profit shifting by large companies and thereby gain additional revenue that can be allocated to essential policies and services such as inclusive growth, youth unemployment or health and education.
Country-by-country reporting can encourage a more level-playing field for small and medium enterprises, which employ far more people in Europe than larger companies but are disadvantaged as a result of tax avoidance schemes which are only available to larger multinational enterprises.
Such disclosure is in the interest of both large companies themselves and their shareholders, allowing investors a vital insight into the political risks a company faces and the sustainability of its tax strategy. This can moreover promote a culture of transparency and dialogue consistent with their commitment to corporate responsibility which demonstrates their positive role to citizens and society at large.
Some companies are already showing the way. There are leading global corporations who report a range of financial information on a country-by-country basis. What these multinationals have shown to be feasible can be done by others without fear of a loss of competitiveness or the risks of disclosing commercially sensitive information. However, in the absence of EU legal standards, as those currently discussed, with which companies must comply, voluntary guidelines often fail to produce high quality reporting which can be reliably compared.
We do not believe that there are serious grounds for claiming that the introduction of country-by-country reporting legislation would be damaging for Europe and European large companies. On the contrary, this legislation is already adopted for the EU banking sector and will be a positive asset to European business in the years ahead. Hence, we call on you to lend your support without further delay to its implementation as the negotiation process goes forward, most notably at the meeting of Ambassadors in Brussels on 11th December