First published in Financial Director, 13 April 2016
MNCs will be forced to reveal where they make profits and pay their taxes as the European Commission takes a ‘small, but important step’ towards greater tax transparency.
Xaver Ditz fears that a number of multinationals may be confused by the reporting proposal and publish their tax affairs without being obliged to. “Whilst the €750m (£603m) turnover threshold for disclosure is in line with the requirements of the BEPS project, the number of companies caught in its net is unverified, with no statistical or empirical evidence to support the reports that 85-90% of multinationals will not be required to report,” he explained, “The assessment of whether a company exceeds this threshold is also equally hard if the ultimate parent company resides outside the EU as the subsidiry may be unable to obtain, the required information to make this assessment.”
Under the OECD agreement, tax administrations of all 31 countries will receive aggregate minformation from multinationals annually, starting with their 2016 accounts.