European Parliament lays down rules for multinationals

This week the European Parliament made an attempt to progress legislation on “country by country” tax reporting which has been deadlocked in the Council of Ministers.

In an effort to break the deadlock in the Council of Ministers in order to begin “trilogue” negotiations, the European Parliament adopted a non-binding resolution on 24 October urging the Council to agree on rules obliging multinationals to disclose what taxes they pay in each country.

During the debate preceding the vote, MEPs said that without agreement, the EU would lack credibility to engage in tax matters on internal fora. Moreover, it was stressed that citizens have a right to know where multinationals pay their taxes and that such a degree of transparency was necessary in light of recent recurring tax scandals.

They also said that unless the EU is able to tackle tax havens within its own borders, it will be difficult for Europe to present itself as a credible interlocutor on the international stage in tax matters.

EU governments view the European Parliament as having no legal basis to decide on a tax proposal. However, the Parliament views the file as relating to accounting and therefore within its remit.  It can be expected that this and other tax matters will loom large in the debate within and between EU institutions in the coming months.