The European Parliament has backed a proposal which requires multinationals with turnover of €750 million or more to report on their tax information on a country-by-country basis.

Under this measure, companies will need to publish this information in a common template publically available for free on their website. However, the proposal contains possible exemptions in the case of commercially sensitive information.

Member states will be able to grant exemptions to companies. In order to do so, it will need to inform the EU Commission about the omitted information together with a detailed explanation for the exemption. The EU Commission will publish on a yearly basis on its website a list of companies that received an exemption and a summary as to why.

Exemptions are only applicable in the jurisdiction of the Member state granting them and have to be renewed annually.

Member of European Parliament (MEP) for the Greens/European Free Alliance group Sven Giegold lamented that the parliament allowed for those exemptions.

“Big corporations have already shown themselves to be highly adept at seeking out loopholes. It is a shame that so many MEPs chose to make their life that much easier,” he said. “The so-called safeguard clause could lead to companies being able to keep their financial arrangements in the dark, stopping country-by-country reporting from fulfilling its promise.”

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“After years of campaigning, this is a big victory for all those that have worked hard for tax justice. The case for greater tax transparency is answerable. If the EU is serious about cracking down on hidden and unscrupulous tax deals, it needs to end the secrecy that allows these practices to flourish. Public country-by-country reporting will make it much harder for multinational corporations to shop around for the lowest possible tax rate, and help bring illegal activity to light.” Giegold added.

The proposal received 534 in favour, 98 against and 62 abstention. MEPs gave their backing for the Economics and Legal Affairs Committees to enter into negotiations with the Council and the European Commission on the proposal. These negotiations or trilogues are likely to start after the summer break. During these negotiations, the European Parliament and Council, with the Commission will negotiate the text of the legislation. The negotiations are a lengthy process and it likely to take several months before an agreement is concluded.

Co-rapporteur for S&D, AT Evelyn Regner said: “If we don’t make country-by-country reporting, we will never bring to light the system of letterbox-companies that is abused to shift profits and avoid taxes worldwide. We are ready now for negotiations with the Council to find a common reporting regime; the EU must lead the fight against tax avoidance.”