01 April 2016

EuropeanIssuers: Country by country disclosure of certain tax information

EuropeanIssuers supports transparency, but opposes disclosure to the public of information on profits, taxes and subsidies on a country-by-country basis, which would put EU companies at a competitive disadvantage and have a negative impact on the EU economy, growth and jobs.

The global effect of the public country-by-country reporting  (CBCR) would negatively impact EU companies since their industrial and commercial strategy would be unveiled. This would far outweigh any benefits expected for public finances in the EU. In particular:

- Disclosure to the public of commercially sensitive information (strategic information on contracts, management, results, level of profitability, etc.) could allow competitors to work out profit margins and other important business information and engage in unfair competition with EU companies, thus impacting EU economic growth.

- Publishing detailed and complex information out of context could result in erroneous interpretationsconcerning the breakdown of national tax liabilities and tax payments and wrong accusations against companies. A proper assessment of companies’ tax positions requires deep expertise and knowledge of domestic and international tax laws, accounting standards, and of understanding of the relationship between various entities of a multinational company, which very few people have, especially amongst the general public.

- EuropeanIssuers encourages the Commission to look at the regulatory developments overseasas some useful lessons can be drawn from experiences of other countries. EuropeanIssuers understands that the US administration has recently indicated that it would not share CBCR information with foreign authorities that choose to make their report public.

In line with the Commission’s commitment to Better Regulation, new rules should not be introduced in an area before other proposed rules have been implemented and have had time to be evaluated. Therefore, the Commission should wait until the above mentioned new rules (introduced through an amendment to the Administrative cooperation directive) are implemented and sufficient time has elapsed to evaluate its impact.

The European Parliament pointed out in its report of 16 June 2015 on better regulation, EuropeanIssuers believes that “a competitiveness assessment should form a significant part of the impact assessment process” and consider that “the draft revised guidelines should contain guidance on how impacts on competitiveness should be assessed and weighted in the final analysis”.

- EuropeanIssuers also questions whether the public consultation on corporate tax transparency can provide valid basis for any proposal on a public CBCR. The consultation took place in absence of a tax CBCR amongst EU countries. Replies to this consultation in favour of a public CBCR are therefore based on assumptions not on facts. In EuropeanIssuers´ view, a valid impact study should be conducted after the OECD BEPS action plan has been implemented amongst OECD countries. Only then its effects can be assessed. 

Full position

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