A plan to force large multinationals to publicly reveal their tax payments and activities per country is the first step towards introducing a minimum European Union taxation rate, the European Parliament’s rapporteur on the proposal has said.
Evelyn Regner, an Austrian MEP with the Social Democratic Party, is on the team representing the parliament in inter-EU negotiations set to start on Monday that aim to hammer out a deal on the so-called country-by-country-reporting proposal by June.
It comes after Ireland was defeated in a key vote last month on the measure among EU member states, which revealed that the required majority to approve it now exists after five years of stalling the proposal by national governments.
The measure would require multinationals with revenue over €750 million to reveal where they conduct their activities, number of employees, and about of taxes paid in each EU country.
“When we have this knowledge, we can work on making it visible, how it looks from country to country,” Regner told journalists.
“I don’t hide that in the long run we should go to a minimum tax rate, we should go to work on a joint level playing field because it’s very bad for the whole European Union for all the governments if all those tax jurisdictions are competing against each other and going downwards, and not upwards.”
“Member states need the money, and reporting is the precondition for all that, and there we are,” she said.
The Austrian MEP invited the Irish government to drop its opposition to the measure, which it rejects on the basis that the legal foundation being used to introduce it is unsound.
The proposal is being drawn up by EU trade and enterprise ministers, instead of finance ministers, which means it can be passed by qualified majority and does not need the usual unanimity that gives Ireland a veto on tax matters.
“It’s a question for all member states in this regard to work closely together. This is of course also an invitation to Ireland. Attracting business is because of the language, because of the close links to the mentality,” Ms Regner said.
“I’m quite sure that US companies could also be attracted be Ireland when we have this country-by-country reporting. But tax avoidance, tax circumvention, and even fraud to support that can never ever be the strategy of the leadership of a country.”
The Department of Finance and the Department of Enterprise, Trade and Employment did not immediately respond to a request for comment.
Ms Regner indicated that the new administration of Joe Biden in the United States boded well for global deals on tax matters, after work on an international deal on digital taxation brokered through the OECD was stalled by his predecessor Donald Trump.
“The US is losing a lot of revenue when Apple or Facebook shifts its profits to Ireland,” she said. Apple and Facebook did not immediately respond to a request for comment.
EU leaders jointly declared this week that they would strive to reach an agreement within the OECD by mid-2021, and that if a deal was not reached the EU is “ready to move forward” with its own plan for a digital tax.
The European Commission will put forward a proposal for a digital levy this year, “with a view to its introduction at the latest by January 1st, 2023” the joint statement by the EU leaders read.