MEPs will today vote on rules which could help address the issue of tax avoidance by multinationals in Europe, with Greens urging support for mandatory country-by-country reporting for all sectors.
Country-by-country reporting has long been advocated by Greens as a crucial measure for providing transparency on the tax dealings of corporations and even more so in the wake of the Lux Leaks revelations.
Greens point to a new report they commissioned which analyses country-by-country data from 26 EU banks . They say the findings demonstrate the need to extend such reporting to all sectors. The report from Tax Research UK finds EU banks have been systematically shifting their profits, over-reporting them in places identifiable as tax havens, whilst appearing to under-report them in places where they have major centres of operation. Three UK based banks – Barclays, Standard Chartered and RBS – are ranked amongst the ‘top 10’ EU banks that are shifting their profits so they can reduce their tax liabilities. Barclays and Standard Chartered record their highest profit per head respectively in Luxembourg and Ireland, which are known tax havens.
Greens will today use the report to justify extending country-by-country reporting to all sectors. The report concludes that the process of profit shifting by banks means some European countries are seriously losing out in terms of revenue while other countries appear to be gaining from tax competition that is inconsistent with the level playing field required by the internal market.
Dr Scott Cato, who is a member of the European Parliament’s TAXE committee, tasked with making recommendations on improving transparency and cooperation between Member States on tax, said:
“The initial results from country-by-country reporting for banks provide clear evidence of profit shifting and show this is a useful and powerful tool in helping to identify and crack down on tax avoidance. The legal affairs committee have already supported the Green proposal and we hope other MEPs will back extending country-by-country reporting to all sectors when we vote on this measure as part of the Shareholder Rights Directive in Strasbourg today.”