The Lux Leaks scandal in 2014, the Panama Papers in 2016 and the new wave of data leaks of November 2017 have revealed the tax schemes that international companies use to reduce their tax burden. And countries around the globe provide the legal and tax framework that facilitates and hides those tax schemes from public view. Luxembourg offers tax rates that are less than one percent. As a result, many companies have established subsidiaries in Luxembourg and then shift their profits there even though actual business activity takes place in other countries. In response to such behaviour, the OECD and European Union member states have adopted ‘country-by-country reporting’, but so far have failed to make those reports publicly available.
The EU Commission finally published its own proposal of public country-by-country reporting as an accounting issue in April 2016 – but considerably watered down the content. The negotiations around this proposal – which has been tightened again after passing through the EU Parliament in July 2017 –are still ongoing as of November 2017. In the negotiations 2015-2017 between the European Commission and Council (member states), Germany has played a pivotal role in leading the coalition against public country-by-country reporting at the EU level. Backed by German multinationals, Germany’s Minister of Finance Schäuble has taken several political steps to organise opposition to public country-by-country reporting at the EU level. His transition from Germany’s Ministry of Finance after the elections may open a new chapter in Europe’s, and indeed, the world’s fight for public accountability of multinational corporations.
- This report describes how organised private sector interests have opposed and attempted to water down efforts to implement country by country reporting through all kinds of lobbying strategies. Given that most multinationals within the scope of OECD country by country reporting operate within the EU, an EU requirement for full publication will have global impact. It would force multinationals to publish global country by country reporting as long as they wish to continue doing business in the EU.
- The significance of country-by-country reporting
- The journey from the UN to the IASB and onto the OECD (1970-2013)
- The UN establishes an expert group
- Audit firms compete with the UN’s advances
- Civil society organisations revive public country-by-country reporting
- Public public country-by-country reporting in the European Union 2013-2017
- The EU Commission tries to delay public country-by-country reporting