Key words: Corporate Income Tax, EU, Transparency, Multinationals
The European Parliament has approved a law requiring multinationals to disclose how much tax they pay in each EU country. This information will also be made accessible on the Internet. This will further prevent tax avoidance by multinationals as stated on the site of the European parliament[1].
The new directive applies to multinationals, and their subsidiaries, with annual revenues of more than € 750 million operating in more than one EU country. They must report on the nature of the business activities, the number of full-time employees, net turnover, the amount of profit tax attributable and paid and accumulated profits for each country.
Subsidiaries and branches whose annual revenues fall below the threshold must also disclose their tax information if it is suspected that they exist solely to help the company evade the new reporting requirements.
Dutch Member if the European Parliament (hereafter; “MEP”) Paul Tang of the PvdA, chairman of the EU Parliament’s tax committee is, has long championed for this law stating that tax-avoiding advisors and multinationals know they are wrong. The risk for reputational damage will force them to look at their tax payments in a different way. Not as a cost, but as the consequence of their success, and an opportunity to contribute to society[2].
Also other MEP’s share the same sentiment as MEP Paul Tang. Co-reporter Evelyn Regner from The Austrian Sozialdemokratische Partei Österreichs said: “Persistence pays off. Despite all the adversity and a five-year-long blockage in the Council, we can proudly say that the call for more corporate tax transparency has been answered. For too long, corporations have played by their own rules. Thanks to the transparency provided by public country-by-country reporting, we will now be able to shed light on this opaque corporate jungle.”
The directive will enter into force twenty days after its publication in the Official Journal of the EU. Member States then have eighteen months to transpose the Directive into national law. This means that companies will have to comply with the first provisions of the directive by mid-2024.
If you would like to know how and if this new law could impact your business, feel free to contact NAZALI (info@nazali.com).
[1] Corporate tax transparency: MEPs okay new country-by-country reporting rules | News | European Parliament. (2021, 11 November). Corporate Tax Transparency: MEPs Okay New Country-by-Country Reporting Rules. Geraadpleegd op 16 november 2021, van https://www.europarl.europa.eu/news/en/press-room/20211108IPR16839/corporate-tax-transparency-meps-okay-new-country-by-country-reporting-rules
[2] Debatten - De openbaarmaking van informatie over de winstbelasting door bepaalde ondernemingen en bijkantoren (debat) - Woensdag 10 november 2021. (2021, 10 november). © Europese Unie, 2021 - Bron: Europees Parlement. Geraadpleegd op 16 november 2021, van https://www.europarl.europa.eu/doceo/document/CRE-9-2021-11-10-INT-1-147-0000_NL.html
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