The European Parliament’s Economic and Monetary Affairs Committee has voted in favor of the Commission’s proposal for the automatic exchange of country-by-country reports.
MEPs approved a report on the proposal by 45 to none, with 11 abstentions. Dariusz Rosati, who prepared the report, said the initiative is “an important step in the fight against unfair tax practices in the EU. It should enhance transparency and reduce harmful tax competition.”
Under the proposal, multinational companies with total consolidated revenues of EUR750m or more would be required to file a country-by-country report in the EU member state in which the ultimate parent entity of the group is resident for tax purposes. That state would then share this information with the other member states in which the company operates.
The report stressed that the Commission should have full access to the information exchanged among member states’ tax authorities, to enable it to assess whether their practices comply with state aid rules. It argued that this is especially important for small- and medium-sized companies that operate in only one country, as they “usually pay an effective rate of tax that is much closer to statutory rates than multinational firms.” It added that “domestic companies should not face disadvantages due to their size or lack of cross-border trade.”
The report also recommended that member states should introduce sanctions for companies that fail to file their country-by-country reports.
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