MEPs back country-by-country reporting
European Parliament members support a resolution aimed at tackling tax evasion through greater country-by-country financial reporting by multinationals.
Members of the European Parliament (MEPs) have passed an anti-tax evasion resolution calling on EU states to ensure greater country-by-country financial transparency by multinationals.
The non-binding resolution states that: "The EU and its member states should make multinationals report their financial performance, tax details, assets and employee numbers country-by-country, so as to help fight tax evasion and illicit money flows in developing countries."
Rapporteur Elly Schlein called on the Commission "to put forward an ambitious action plan to support developing countries in fighting tax evasion and tax avoidance and in setting up fair, well-balanced, efficient and transparent tax systems, also with a view to the upcoming Conference on Financing for Development".
The resolution called for a series of measures:
Country-by-Country Reporting (CBCR)
Enforcement of the principle that listed or unlisted multinational companies in all sectors (but particularly those extracting natural resources) must adopt CBCR as standard. This would require companies to publish in their annual reports, for each territory in which they operate, the names of all subsidiaries, their financial performance, relevant tax information, assets and number of employees, and to ensure that this information is publicly available.
Make company ownership information public
Publication of information on beneficial ownership of companies, trusts and similar institutions should be made publicly available in open-data formats, so as to prevent anonymous shell companies and comparable legal entities being used to launder money, finance illegal activities or terrorist activities.
No EU support for corporate tax evaders
EU financial institutions such as the European Investment Bank, the European Bank for Reconstruction and Development and institutions in the member states that fund development should monitor companies or other legal entities that receive support. They should ensure that they do not "participate" in tax evasion and avoidance by interacting with financial intermediaries established in offshore centres and tax havens or by facilitating illicit capital flows.
UN International Conference on financing for development: 13-16 July in Addis Ababa
Participants should deliver viable ways to finance the post-2015 global development agenda, which is to be decided at a UN summit in New York in September.
This is a non-binding resolution but may point the way to future mandatory measures. The UK Government is already in the process of implementing a central public register of people with significant control of companies (the PSC Register) which was legislated for in the Small Business, Enterprise and Employment Act 2015 but this does not cover trusts. The government also intends to implement a form of country-by-country reporting for UK multinationals from January 2016 but this would be reporting to tax authorities and would not be public reporting.