In his reaction to a debate about the Country-by-Country Reporting (CbCR) Directive in the plenary of the European Parliament, former Prime Minister Alfred Sant emphasized that tax matters should remain subject to the national and not the EU competence. He referred to three chief issues raised by the adoption of the CbCR Directive. These are the fight against tax evasion and avoidance, fair tax competition and Governance parameters on tax competences.
MEPs gave their go ahead to the Directive on public CbCR, as regards disclosure of income tax information by certain undertakings and branches.
This legislation will pave the way for greater transparency and additional safeguards to prevent abuses by companies whereby firms operating in several countries will have to openly divulge the tax they pay in EU states separately and there will be comprehensive regulations to stave off abuse by international firms.
Sant stated that the genuine need to fight tax evasion and avoidance, and to enable public scrutiny over tax matters makes transparency in this area imperative, certainly between tax authorities. Having said that, he sounded a cautious note on the extent to which information should be openly obtainable and acceessible. “Legitimate questions arise about whether the release of such information would be of detriment to European undertakings by undermining their competitiveness,” he warned.
The Labour MEP asserted that the principle of fair tax competition between states must be maintained and stressed that the CbCR Directive should not lead to tax harmonisation which will be only beneficial to larger, higher spending Member States.
He also pointed out that on tax matters, which remain the competence of Member States, full unanimity on decision making should be retained. The CbCR initiative is being adopted on a qualified majority basis and a unanimous agreement was not reached in this regard.
This “makes its legitimacy shaky.”
