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ICC Concerned About EC Proposals On Tax Data Disclosure

by Mike Godfrey,, Washington

19 April 2016

The International Chamber of Commerce (ICC) has highlighted a number of potential concerns regarding new proposals from the European Commission that would require multinational companies to publicly disclose their earnings and tax bills in the European Union.

The latest version of the Commission's proposal on country-by-country (CbC) reporting would require large companies to publish tax data for every EU jurisdiction in which they operate, together with an aggregated breakdown for their operations in other countries throughout the world.

The proposals "include a last-minute addition requiring corporations to disclose tax data in jurisdictions deemed as 'tax havens' – despite there being no consensus within the EU states on what constitutes a tax haven at the current time," the ICC said in a statement. The proposal also breaks new ground in relation to CbC reporting standards by stipulating seven data points that will be put into public registers, broken down by country: taxes paid, taxes due, pre-tax profit, revenue, number of employees, business profile, and accumulated earnings, it said.

In the wake of the "Panama Papers" revelations, public debates have focused on the importance of international cooperation to limit tax avoidance. According to the ICC, the Panama Papers have shown that it is mainly individuals, not multi-national enterprises, who have "made use of the possibility of intransparent activities."

The ICC therefore urged policymakers not to lose sight of the "great strides" already taken to establish global standards to protect the integrity of the international tax system, including new tax transparency measures related to the automatic exchange of financial account information between national tax offices.

The ICC highlighted its concern that going beyond the scope of existing international guidelines, by making this information publicly available, could result in severe consequences for EU companies. Christian Kaeser, Global Head of Tax at Siemens and Chairman of the ICC Commission on Taxation, said: "As it stands, the EC proposal risks exposing commercially sensitive information that would place companies operating within the EU at a competitive disadvantage for global investment, without any additional benefit to public finances."

The ICC said it remains concerned about the broader economic impact of the EC proposals and fears that the measures could hamper global efforts to establish a consistent international landscape. This could have knock-on effects for international trade and businesses of all sizes, it said. There are also significant questions about the cost impact of the new proposals and the potential for such measures to inadvertently undermine the relationship between tax administrations and taxpayers, it added.

"Business acknowledges the Commission's aim to improve the functioning of the Internal Market and uniformly implement the BEPS Action Plan within the EU, but strongly recommends that the Commission aligns its proposed measures with already existing guidelines that would facilitate greater consistency internationally, and incentivize cross-border trade, investment, and economic growth," Kaeser said.

The proposals will need to be approved by EU member states and the European Parliament by a qualified majority vote before they can be adopted into law.

TAGS: individuals | compliance | tax | investment | business | European Commission | value added tax (VAT) | tax compliance | tax avoidance | law | employees | Organisation for Economic Co-operation and Development (OECD) | transfer pricing | Switzerland | standards | trade | Panama | Europe | Tax | Tax Evasion | BEPS

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