Tax reporting vote welcomed but leaves massive loophole – Carthy
Sinn Féin MEP Matt Carthy has welcomed the European Parliament's vote in Strasbourg today to introduce public country-by-country reporting of turnover, profit and tax information for multinational giants, but has criticised the conservative groups' introduction of a so-called safeguard clause loophole that significantly weakens the proposal.
Addressing the Parliament this morning, Carthy called for the proposal to apply to companies that fall under the EU definition of a "large company" – with turnover of more than €40 million per annum – and urged fellow MEPs to reject the liberal and conservative amendments that sought to provide exceptions to the requirement that companies provide a full breakdown (disaggregated data) of their activities in all countries in which they operate.
"Public country by country reporting is the single most important action we can take to lift the veil on profit shifting by multinationals, which results in $500 billion in tax being lost each year. Tax justice activists and development NGOs have been campaigning for this measure for more than a decade. We need to get it right," he told MEPs.
"Limiting the requirement to companies with a turnover of more than €750 million euro excludes 85% of multinationals. It should apply to all those with a turnover of more than €40 million.
"We need to demand companies report the full breakdown of their figures in each country, not only in EU states and countries on a future EU tax blacklist, which we know will be a very small list – just Trinidad & Tobago if it is based on the OECD's list.
"It’s appalling that liberal and conservative groups have sided with multinationals by introducing the so-called safeguard clause on this global reporting requirement.
"This is a loophole you could drive a truck through. Make no mistake, its purpose is to allow profit-shifting to tax havens to continue unhindered.
"The only people with anything to fear from tax transparency are tax cheats and their cheerleaders. Why are you helping them?"
Speaking after the vote, Carthy, a member of the Panama Papers inquiry committee, said: "MEPs had taken a more progressive position on many issues than the Commission at committee stage, and the draft report in Parliament would have strengthened the proposal significantly. But during negotiations at committee stage, conservatives and liberals opposed the progressive groups and won a small majority in favour of limiting the proposal to companies above the €750 million threshold.
"It appeared as though the Parliament’s economic committee would take a strong position on the question of disaggregation of data, but at the last minute, the liberals and the EPP group, of which Fine Gael is a part, banded together to introduce a so-called 'safeguard clause', which can be forever renewed, under which corporations can be exempted from reporting requirements in one or more jurisdictions on the grounds of 'commercial sensitivity'.
"Fine Gael seems determined to resist full transparency on corporate taxation, whether it is in the Irish Government, in the European Parliament, or in the Council. Today they had an opportunity to demonstrate a commitment to tax transparency but failed to do so."