COMMONS

European MPs back PAC call for greater transparency

28 June 2016

Senior members of national parliaments in Europe support calls by the Chair of the Public Accounts Committee for greater public transparency on taxes paid by multinational companies.

An open letter concerning country-by-country reporting, addressed to the governments of its signatories has been published.

The letter is published as MPs from nine parties in the UK Parliament are backing an amendment to the Government's Finance Bill, tabled by Public Accounts Committee member Caroline Flint MP.

The amendment would require qualifying multinational enterprises to make public their country-by-country reporting information for corporation tax.

Amendments to the Finance Bill are expected to be debated by MPs today.

European Parliamentarians sign open letter

The open letter has been signed by the chairs of parliamentary finance committees in Germany, Hungary, Finland, Norway and Slovakia, as well as senior MPs in the Netherlands, Czech Republic and Bulgaria.

It urges governments to support a measure that would show, for each tax jurisdiction in which multinational companies do business, their revenue; profit before income tax; income paid and accrued; total employment; capital; retained earnings, and tangible assets.

Signatories also expect companies "to identify each entity in the group that is doing business in a particular tax jurisdiction and to provide an indication of the business activities in a selection of broad areas".

The letter states:

"We want to see this information published so that our citizens can see for themselves what tax multinationals pay so that not only will our national tax authorities see the full picture but so will our citizens.

Publication is one way to persuade these companies to explain their tax planning. It would deter them from using tax havens and shell companies."

Chair's comments

Meg Hillier MP, Chair of the PAC, said :

"Our Committee believes strongly that the tax affairs of multinational companies should be open to public scrutiny.

Businesses use complex strategies to minimise their tax bills and the lack of transparency over these arrangements does nothing to build confidence that corporations are paying their fair share.

The public anger that followed the announcement this year of Google's £130 million tax settlement with HM Revenue & Customs is just one example of the strength of feeling among ordinary taxpayers.

PAC has been clear that HMRC should take a lead in pressing for changes to the international rules that protect corporate taxpayer confidentiality.

The concerns of taxpayers in other countries must also be heard and acted on by their governments.

The support from colleagues chairing European finance committees and other parliamentarians sends a powerful message about our common cause on behalf of those taxpayers.

Public country-by-country reporting is a vital step towards greater tax transparency and we look forward to meaningful action to deliver this in the months ahead."

Amendment to the Finance Bill

Caroline Flint's amendment concerns Clause 149 of the Finance Bill, which introduces a new measure whereby qualifying companies will be required to publish a 'tax strategy' annually.

The amendment is to insert an additional requirement in Clause 149, stating that qualifying multinational enterprises must include in this new public tax strategy their country-by-country reporting information.

It has the backing of 12 members of the Public Accounts Committee and two of its former Chairs, as well as MPs from nine different parties.

The amendment and list of its signatories can be viewed on page 32 of the Finance Bill.

European Parliamentarians

Parliamentarian Position and Nation Signed Letter
Hans Olav Syversen Chair, Finance Committee, Norway Letter (PDF PDF 442 KB)
Ingrid Arndt-Brauer Chair, Finance Committee, Germany Letter (PDF PDF 212 KB)
Burány Sándor Chair, Committee on the Budget, Hungary Letter (PDF PDF 180 KB)
Timo Kalli Chair, Finance Committee, Finland Letter (PDF PDF 258 KB)
Ladislav Kamenický Chair, Committee on Finance and Budget, Slovakia Letter (PDF PDF 276 KB)
Professor Rumen Gechev Deputy Chairperson, Budget and Finance Committee, Bulgaria Letter (PDF PDF 201 KB)
Petr Gazdík Deputy Chairman, Chamber of Deputies, Czech Republic Letter (PDF PDF 527 KB)
Evelyn Regner Member of the TAXE2 Committee Report on Tax Avoidance, European Parliament, Austria Letter (PDF PDF 291 KB)
Michael Theurer Rapporteur of the TAXE2 Committee Report on Tax Avoidance, European Parliament, Germany Letter (PDF PDF 262 KB)
Steven van Weyenberg Member, Finance Committee, the Netherlands Letter (PDF PDF 466 KB)
Wouter Koolmees Member, Finance Committee, the Netherlands Letter (PDF PDF 457 KB)
Arnold Merkies Member, Finance Committee, the Netherlands Letter (PDF PDF 378 KB)

Further information

Image: iStockphoto

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