The European Parliament on Tuesday approved a proposal that would require multinational companies to publicly report their tax information on a country-by-country basis, with some exceptions for certain sensitive information. The measure expands on the EU’s previous country-by-country reporting requirement by making the information reported publicly available.
Under the proposal, multinational companies with annual revenue of €750 million or more would have their income tax information published in a common template in each jurisdiction in which the company or a subsidiary does business. Companies would be required to post the information on their websites. The European Commission would maintain a public registry of this information.
Information in the reports would include a list of all subsidiaries with a brief description of the nature of their activities and their geographic location; the number of full-time-equivalent employees; net revenue; stated capital; profit or loss before income tax; amount of income tax paid in the jurisdiction; accumulated earnings; and whether the company or its subsidiaries benefit from any preferential tax treatment.
Companies could receive exemptions from revealing certain commercially sensitive information from EU member states. Exemptions would be reviewed annually and would only apply in the member state granting the exemption. Member states would be required to inform the EU Commission about the omitted information and give a detailed explanation for the exemption. The commission will publish a list of companies that were granted exemptions and a “succinct” explanation of why the exemptions were granted.
The proposal passed the Parliament by a vote of 534 to 98, with 62 abstentions. It now goes back to the responsible committees for negotiations on the basis of a plenary mandate.
—Alistair Nevius (Alistair.Nevius@aicpa-cima.com) is CGMA Magazine’s editor-in-chief, tax.