Country-by-country, step-by-step

Carl Dolan
28 May, 2015

The reliably leaky Commission machine is at it again, this time widely trailing its plans to tackle tax avoidance in the EU to the Brussels press and MEPs. You can read the entire text here.

Our main interest in all of this is the Commission’s plans for improving the transparency of multinational companies, who in most cases reveal nothing about their financial contributions to the countries where they operate. This ‘country-by-country reporting’ is important for their accountability to citizens as distinct from their shareholders, and is a principle the Commission has accepted and enshrined in law for the banking and extractive sectors.

The Commission had already announced in March that they would assess the case for extending this legislation to all business sectors by carrying out a formal impact assessment. So far, so bureaucratic. We were anticipating more detail on this in the public statement to be released on 17 June, but from the leaked document it seems that the only new element is a public consultation that will be held to feed into the impact assessment. One further hoop to jump through.

Don’t get us wrong – it’s not that Transparency International is against having public consultations on EU legislation. What is frustrating is the pace of decision-making and the vagueness of the commitments, which seem to indicate a reluctance of the Commission to get to grips with the topic, despite the urgent need for transparency that was demonstrated by the LuxLeaks revelations. At a minimum, three months after the initial announcement, one would expect a detailed timeline for the consultation and the impact assessment, who will carry it out and what evidence they will assess.All this contrasts with the decisiveness of the European Parliament, which has voted in favour of mandatory public country-by-country disclosures at the committee stage earlier this month. This follows a European Parliament resolution from January calling on the Commission to prepare legislation on country-by country reporting. On June 10 the entire Parliament will vote on this measure. If the pro-transparency coalition wins the day – something that is not at all certain in the face of stiff opposition – then we are set for negotiations with national governments and possibly agreement on legislation by the end of the year. By which time, the Commission might have sifted through all those consultation responses.

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