Public country-by-country reporting: Council paves the way for greater corporate transparency for big multinationals

Public country-by-country reporting: Council paves the way for greater corporate transparency for big multinationals

The Council today adopted its position at first reading on the proposed directive on the disclosure of income tax information by certain undertakings and branches, commonly referred to as the public country-by-country reporting (CBCR) directive, paving the way for its final adoption. The adoption of the Council’s position follows a provisional agreement reached with the European Parliament in June.

Transparency is essential for the smooth functioning of the internal market, and I am pleased that we have stepped up our ambition for tax transparency. This directive will require multinational companies to report on where they make their profits and where they pay their tax, which is more crucial than ever to ensure a fair economic recovery from the current pandemic crisis.

Zdravko Počivalšek, Slovenian minister for Economic Development and Technology

The CBCR directive aims to enhance the corporate transparency of big multinational companies. It will require certain multinational undertakings with revenue of more than €750 million to disclose publicly in a specific report the income tax they pay. For the first time, non-European multinationals doing business in the EU through subsidiaries and branches will also have to comply with the same reporting obligations as EU multinational undertakings.

The reporting will take place within 12 months of the date of the balance sheet for the financial year in question. The directive sets out the conditions under which a company may defer the disclosure of certain information for a maximum of five years. 

The proposed directive also stipulates who bears responsibility for ensuring compliance with the reporting obligation.

Background and next steps

The proposed directive, first tabled in April 2016, is part of the European Commission action plan for a fairer corporate tax system.

The European Parliament adopted its position at first reading on 27 March 2019. Negotiations between the co-legislators started in March 2021 and resulted in a provisional agreement on 1 June 2021, with points such as the transition period and the safeguard clause being finalised.

The next step before the directive can enter into force is the formal approval of the provisional agreement by the European Parliament. The directive will enter into force on the 20th day following its publication in the Official Journal of the European Union. Member states will have 18 months from the entry into force of the directive to transpose it into national law.

Source: Public country-by-country reporting: Council paves the way for greater corporate transparency for big multinationals – Consilium (europa.eu)

Photo Credit : https://pixabay.com/nl/photos/zakenman-oprichting-financiering-3300891/

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