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As the EU draws closer to agreeing multinational companies should publish their country-by-country reporting, the lobbying is becoming predictably extreme. 'BusinessEurope' has written to Portugal's @pedrosizavieira, who chairs the COMPET council which will take the decision...
BusinessEurope, by the way, is a federation of national business lobby groups across the EU and UK - some, but not all of which are dominated by the very multinational companies responsible for hundreds of billions of euros in lost revenue each year. https://www.taxjustice.net/reports/the-state-of-tax-justice-2020/
BusinessEurope begin by emphasising their commitment to the fight against corporate tax evasion and tax fraud.
They must have forgotten to mention tax avoidance there, but they do stress their support for the OECD's Base Erosion and Profit Shifting initiative.
They must have forgotten to mention tax avoidance there, but they do stress their support for the OECD's Base Erosion and Profit Shifting initiative.
BusinessEurope then make the somewhat extraordinary claim that they have been 'actively involved to support... the non-public [OECD version of] country by country reporting.'
It must have been some entirely different business lobby groups that resisted OECD CBCR tooth and nail.
It must have been some entirely different business lobby groups that resisted OECD CBCR tooth and nail.
Background: this is info about where companies have their economic activity - where they make their money, and where they declare profits and pay tax. Increasing numbers of companies like Vodafone and Shell publish voluntarily, including under the @GRI_Secretariat standard.
Background 2: there are also mandatory reporting standards for EU banks and for some extractive sector companies. This is a level playing field measure, to put multinationals on par with smaller domestic businesses that publish accounts.
Background 3: investors really want country by country data to be made public, because they face the risks - but receive no higher returns - from companies' tax avoidance. https://www.taxjustice.net/2020/03/19/investors-demand-oecd-tax-transparency/
Background 4: requiring EU banks to publish country by country data, even with a weak standard, led to a 10% increase in tax paid. This is genuinely powerful transparency - hence BusinessEurope's increasingly wild opposition, presumably.
OK, back to the letter. Now that the OECD standard exists, BusinessEurope can't make any objections about compliance costs - since they would simply be asked to publish what they are already giving to tax authorities. Instead, they make three arguments.
First, BusinessEurope tell @pedrosizavieira that publishing country by country reporting would put them at a commercial disadvantage. And that even a *6 year!* delay would not be enough to protect them.
But CBC information is very limited compared to what market analysts regularly publish, or the public accounts of a purely domestic business, so this seems a ridiculous claim on the face of it. Moreover, hiding the source of profits (if it were possible) would damage competition.
So what might be the actual BusinessEurope concern? Presumably that this data does what it is supposed to do: reveals the nature and extent of their profit shifting. Anecdotally, we know many companies have curtailed their excesses once they understood how bad the CBC data looked
Hiding the nature and extent of profit shifting is not about commercial advantage - the big four accounting firm that developed whichever technique you use, is also selling it to your competitors. It's about hiding your tax abuse from the public.
The second argument BusinessEurope make to @pedrosizavieira is really saying the quiet part out loud: publishing CBC data would undermine tax authorities, 'not support an informed discussion' by the misguided public, and lead to reputational damage.
To untangle the points there
1. tax authorities may be under pressure if it turns out they haven't done a good job against our tax abuse
2. the public will be angry about it
3. the public will be angry *with us*
1. tax authorities may be under pressure if it turns out they haven't done a good job against our tax abuse
2. the public will be angry about it
3. the public will be angry *with us*
BusinessEurope's third argument to @pedrosizavieira is a new twist on an old one. Namely, the OECD data is supposed to be kept private (because of the intense business lobbying back in 2013-15) - and you might upset the Biden administration if you require it to be public.
This is especially feeble. The idea that the EU's corporate transparency position should be set by the heavily lobbied, lowest common denominator outcome of a (non-binding) OECD process 5 years earlier, is - an interesting view on European sovereignty from BusinessEurope.
And the idea that US-EU relations might depend on the EU not requiring a bit of compliance cost-less transparency from major multinationals - at a point when (i) EU members are imposing DSTs all over the place, & (ii) the US might well introduce public CBC itself - is execrable.
Finally, BusinessEurope wraps up their special pleading in the overall claim that publishing country by country reporting data would risk EU competitiveness.
This is the big, false claim that cannot be allowed to stand - because the exact opposite is true.
This is the big, false claim that cannot be allowed to stand - because the exact opposite is true.
Publishing CBC data would:
- level the playing field for smaller, domestic businesses;
- reward genuine productivity rather than tax abuse; and
- stop multinationals wasting resources on tax abuse techniques instead of tangible improvements.
EU competitiveness wins all round!
- level the playing field for smaller, domestic businesses;
- reward genuine productivity rather than tax abuse; and
- stop multinationals wasting resources on tax abuse techniques instead of tangible improvements.
EU competitiveness wins all round!
The membership of @BusinessEurope's member organisations include many of the small and medium-sized businesses that suffer most from the unlevel playing field of multinational companies' tax abuse. Did they really support this, @cip_empresarial @CBItweets @CEOE_ES @medef ?
Public country by country reporting is coming, and soon. There will still be work to do to improve the standard and the nature of the publication of data, and the lobbyists will keep fighting to make it as weak as possible - but accountability for tax abuse is on the way.
