Letter: Dear German Presidency,take this unique opportunity to vote for tax transparency!12. November 2020
Subject: Requestfor including the legislative proposal on PublicCountry-by-Country Reporting on the agenda of the Competitiveness Council in November 2020.
Dear Federal Minister of Justice and Consumer Protection, Ms Christine Lambrecht
Dear Federal Minister of Finance, Mr Olaf Scholz
Dear Federal Minister of Economic Affairs and Energy, Mr PeterAltmaier
We, the undersigned Members of the European Parliament, are writing to you regarding the legislative proposal forpublicCountry by Country Reporting (CBCR) to requestthat you ensure this file is on the upcoming agenda of the Competitiveness Council in November 2020, and to support an ambitious agreement and adoption of a ‘general approach’ without delay.
As you are no doubt aware, Austria has recently changed its position with respect to the proposal, meaning that there is now a qualifiedmajority of Member States in support of adopting a general approach. In its role as President of the Council, Germany must take into account recent political developments with respect to the legislative proposal and enable a dialogue with the Parliament to reach agreement at both technical and political level. We,therefore,request the Presidency to ensure that the legislative proposalshall be put on the agenda.
Global tax scandals as well as recent academic research have shown how large multinationalcorporations (MNCs) continue to conceal where they do business and how much they are paying intax, despite the introduction of non-public CBCR. In contrast, publicCBCR could effectively address the secrecy surrounding multinationals’ activities, providing policy makers, citizens, workers, scholars, journalists,shareholders, investors and tax authorities with valuable information.
It is clear that while the political deadlock in the EU Council has prevented adoption of EU legislation, the value of public CBCR in addressing tax avoidance by large MNCs and restoring confidence of European citizens has led to significant developments in other regions and on voluntary reporting. At present, legislators in the United States are also considering a legislative proposal to introduce public CBCR. Additionally, business and investor communities have also supported public CBCR, with many large companies publishing this information voluntarily and institutional investors with approximately US$90 trillion in assets under management advocating for mandatory publicCBCR. Last year,the world’slargest voluntary sustainability reporting process, the Global Reporting Initiative, adopted a new standard introducing public CBCR for all reporting companies.
Research has shown that existing public CBCR requirements for banks in the EU have already disincentivised profit shifting to low tax jurisdictions. Public CBCR would also provide policy makers with data, which can enable them to identify loopholes in the tax system and inform evidencedriven policymaking to ensure fairtaxation. And with it fair competition, where multinationals will not be able to outcompete local competitorsjust because of systematicabuse oftaxation systems.
In the time of unprecedented health and economic crisis looming over Europe, it is imperative to ensure that everybody, including the large multinational companies, are fully accountable and pay their fair share. Although we welcome the Presidency’s work on taxing the digital economy and prioritizing the work at OECD level to find an agreement on a minimumtax, we are surprised to see that publicCBCR receiveslittle attention. In terms oftax transparency and tax fairness, publicCBCR is a game changer to be embraced, in particular by high tax European countries such as Germany and France losing billions of corporate tax revenues on an annual basis. Public CBCR should be treated with the exact same urgency and not further delayed in Council.
Considering all the above and to conclude, we urge the Ministers Christine Lambrecht, Olaf Scholz and Peter Altmaierto requestthat the German Presidency puts the legislative proposal for public country by country reporting on the agenda of the Competitiveness Council in November 2020.