The EU Competitiveness Council (COMPET) failed to agree on a directive concerning disclosure of income tax information by large international companies. EU Ministers responsible for industry and the internal market met in Brussels to discuss, among others, Country-by-Country reporting (CbCR).
EU member states are required to undertake necessary actions in order to prevent scandals like the Panama Papers. The legislative proposal on public CbCRs on large multinationals would lead to increased transparency on country by country performance information. The proposal is advanced and there is an overall support for the substance. However, member states do not agree on the legal basis. Certain member states find that the legal basis proposed by the Commission is the correct one and that the proposal should be approved by a qualified majority. Other member states believe the proposal relates to fiscal matters and, therefore, requires unanimity in the Council. This issue has been discussed at length since 2016 but remains unsolved.
Finish minister Timo Harakka, who chaired the meeting, pointed out that the file is not a tax file, but is at its core about corporate transparency, which he said is at the public interest at large rather than the aim of determining tax avoidance in the specific benefit of tax authorities.
The ministers continue to discuss the details on the EU Commission’s proposal for public CbCR, but want to advance the discussion in the Economic and Financial Affairs Council (ECOFIN).