Ireland set to oppose new tax transparency law at key EU vote

Efforts at the EU to bring greater transparency to the activities of multinational companies is once again set to be opposed by Ireland, a coalition of development organisations has warned.

The new law, known as public country by country reporting, would require companies to report publicly on the full spectrum of their activities in the jurisdictions in which they operate, and has the potential to help identify possibly illegal instances of profit shifting by multinational companies.

The EU’s Competitiveness Council, made up of Business and Enterprise Ministers from the 27 Member states, is responsible for negotiating the law. It will meet on Thursday 25 February where member states will be asked to make their position known and Ireland is one of the few remaining countries continuing to oppose the initiative. (1)

ActionAid Ireland, Christian Aid Ireland and Oxfam Ireland, who have been campaigning for over a decade for the introduction of public country by country, are calling on the government to drop their opposition to the measure and to support efforts to bring greater transparency to the profits made and taxes paid by multinationals in the countries in which they work.

The new law would have no impact on the taxation of individual companies, nor would it affect the tax rate, tax base or tax sovereignty of any jurisdiction.

Christian Aid Ireland’s Head of Policy and Advocacy, Sorley McCaughey said: “Compared to some of the changes to international taxation being negotiated at the OECD, public country by country reporting is relatively modest. It is a cost-free change that has only positive benefits that the government should have no hesitation in supporting,”

“At a time when public finances are under extraordinary strain, it’s really important that the public can see whether or not multinational companies are making a fair contribution to the society in which they operate.”

The Government has previously raised technical and procedural objections to try to block country by country reporting, arguing that it should progress through an EU Council meeting of Finance Ministers, which would enable a national veto, as opposed to current plans which only require a simple majority. Despite legal changes to the text to provide reassurances, the Irish government insist they should maintain a veto.

While the Government has insisted it is committed to increased tax transparency, arguing that such measures will dispel accusations over Ireland’s role in global tax avoidance, Ministers have refused to state whether they support the country by country reporting proposal itself should disagreements over the legislative process be resolved.

Ireland’s position is at odds with the majority of other EU members states, the Commission, and the European Parliament’s own legal Service who all share the view that this file is an accounting and company law issue and not a tax issue.

Oxfam Ireland Chief Executive, Jim Clarken, said: “The revelations from multiple leaks like the Paradise Papers and Lux leaks have shown the many ways multinational corporations are shifting profits to avoid tax. Oxfam has documented how such tax avoidance undermines developing countries ability to generate adequate revenues to provide comprehensive public services, such as healthcare and education, which help tackle poverty and foster prosperity. It is untenable that Ireland is attempting to block this basic tax transparency measure. This proposal is a vital step towards making sure that multinational corporations pay their fair share of taxes, in developing as well as developed countries.”

Developing countries are disproportionately affected by multinational shifting profits but have significantly less access to information about multinational's activities than developed countries.

Under current reporting requirements none of Ireland's development partners have access to country by country reports at present and only four African tax administrations can currently receive country by country reports through the system of automatic information exchange. All tax authorities and policy makers would have equal access to country by country reports if they are made publicly available.

A previous report by Christian Aid has found that developing countries are being robbed of revenues worth $416bn a year by abusive and harmful tax practices by companies and wealthy individuals exploiting tax loopholes to avoid paying tax.

ActionAid Ireland CEO, Siobhán McGee, said: “Last year ActionAid reported that big US technology companies are exploiting loopholes in global tax rules to avoid paying as much as $2.8bn in tax a year in developing countries. The World Health Organization estimates that the 20 countries studied by ActionAid need to employ at least 1,790,000 more nurses by 2030 to achieve their benchmark of 40 nurses per 10,000 people. The money lost to tax avoidance could pay for all of these nurses in just three years. In a time of unprecedented health and economic crisis, it is imperative that everybody, including large multinationals, is fully accountable and paying their fair share.”

If agreement is reached formal negotiations between the European Council, Commission, and Parliament to bring into law public country by country reporting would take place over the course of 2021.

Ends

Contact

Caroline Reid | caroline.reid@oxfam.org | 087 912 3165

Notes for Editors

(1) Due to coronavirus restrictions member countries will verbally indicate on 25 Feb whether they support the initiative, after which each member states EU ambassador will write to the Council during week of 1 March to officially confirm whether they support the initiative or not.