The new proposal on corporate tax disclosures by the European Commission does not deliver meaningful information to provide real transparency, denounce NGOs.

The new proposal will amend the Accounting Directive (Directive 2013/34/EU) and aims at ensuring that large groups publish an annual report on the profit and the tax accrued and paid in each Member State on a country-by-country basis.

Last week, Pierre Moscovici, Commissioner for Economic and Monetary Affairs said that Panama Papers revelation left him it outraged and furious and called for greater tax transparency both inside the EU and abroad. “We will not relent in putting pressure on the rest of the world to show the same level of ambition.”

Read “Panama Papers: Commissioner Pierre Moscovici outraged and furious” for more information.

According to the group,  although the Commission stated  its commitments to transparency, the new proposal fails to address public concerns following the Panama Papers leak.

“Our proposal to increase transparency will help make companies more accountable. It will promote fairer competition between companies regardless of their size,” Commissioner Jonathan Hill said on occasion of the of the forthcoming proposal.

What is wrong with the new Proposal?

After the Panama Papers scandal, unleashed by the investigation lead by the German newspaper Süddeutsche Zeitung, the International Consortium of Investigative Journalist (ICIJ) and 100 more media partners,  companies made some last minute concessions.

However, the new proposal  open only a part of multinational companies’ tax payments and other finances to scrutiny, leaving companies free to evade accountability for their financial affairs in the world’s poorest countries.

“Under the draft legislation, multinationals will only be required to publish information on a country-by-country basis for activities inside the EU and for countries on a yet to be published EU list of tax havens, writes Transparency International.

So companies would only report on their activities in 28 countries and a few other selected ones since, for the rest of the world, EU firms will only have to disclose an aggregate figure.

Transparency International calls then on the European Parliament to stand up for corporate accountability and table a proposal for genuine public country-by-country reporting (CBCR).

And the ​European Parliament has reacted by voting for a stronger public CBCR proposal within the Shareholders Rights Directive, currently under trilogue negotiations.

Campaigning for real tax transparency

Transparency International is just a voice among many others. The Financial Transparency Coalition, Oxfam, the European Network on Debt and Development, and ActionAid are all campaigning together for a strong public country-by-country reporting, which would require multinational companies to disclose a breakdown of profits earned, taxes owed and taxes paid, number of employees and turnover, as well as an overview of their economic activity in every country where they have subsidiaries, including offshore jurisdictions.

“While such a measure would allow for real tax transparency, the Commission proposal is far less ambitious,” states a joint CSO reaction from Campaigners.

An Oxfam report on country-by-country reporting by French banks revealed the very prominent role of tax havens for these companies, as 9 out of 10 of the world’s top 200 companies are present in at least one tax haven and corporate investment in tax havens quadrupled between 2001 and 2014.