EU regulatory chief wants country-by-country tax reporting from large corporations

“Europe’s top regulatory official is seeking to force large companies to disclose how much tax they pay in each country where they operate, a measure some politicians say could curb tax avoidance,” John O’Donnell reports for Reuters.

“Michel Barnier, the European commissioner in charge of drafting business regulation, said in a speech in Amsterdam that rules which will force banks to report their profits, taxes and subsidies by country from 2015 should be extended to cover other companies,” O’Donnell reports. “Corporate tax avoidance has become a big international political issue over the last year and was given new impetus this week by a U.S. Senate report into Apple Inc… Apple said it pays all the tax due in every country where it operates.”

O’Donnell reports, “Tax campaigners, who have been emboldened by public anger at media reports of widespread corporate tax avoidance at a time of austerity, say naming and shaming low tax payers will deter avoidance. U.S. coffee chain Starbucks agreed to pay an additional 20 million pounds in UK tax last year, after a Reuters investigation showed it assured investors the country was a profitable market after telling tax authorities its operations there lost money.”

MacDailyNews Take: The UK’s government most recent annual spending totaled £694.89 billion. Starbucks’ extra £20 million fueled the UK government for 15 minutes and 9 seconds.

O’Donnell reports, “Big business is strongly opposed to country-by-country reporting which companies say would impose unreasonable administrative burdens. The Organisation for Economic Co-operation and Development (OECD), an international advisory body, has said the practice of companies shifting profits out of countries where they are earned into tax havens was growing. The G20 group of leading economies has asked the OECD to consider proposals to tackle the problem and the think tank is due to issue a report in July… Britain has said it backs additional disclosure by companies about their tax affairs, on a voluntary basis.”

Read more in the full article here.

MacDailyNews Take: Hopefully all of this recent brouhaha results in positive change (dramatic simplification) regarding corporate taxes and, hopefully, other types of taxation as well.

Related article:
If Apple paid more tax, we might pay less or something – May 22, 2013

14 Comments

  1. “Big business is strongly opposed to country-by-country reporting which companies say would impose unreasonable administrative burdens.”

    It would appear that doing a little bit more paperwork amounts to an unreasonable burden but setting up an entire pseudo-headquarters in a low tax country is not in any way burdensome.

    1. Dude,

      In the U.S. alone, Apple’s tax forms are at least two feet tall.

      Your “little bit more paperwork” is a total mischaracterization of reality.

      Your little progressive dreamworld is imploding in failure yet again.

    2. I run a relatively small company (I have 5 employees) in the US with one JV subsidiary in Asia. My tax preparation for the US costs me about $30,000 every year. Does this seem like it makes sense?

      1. Sounds crazy with 30000 for just the preparations. But in sure the firms that handle the taxes aren’t cheap so they are probably contributing to the costs… ?

  2. When countries having been living on the high hog without regard for expenditures, this is what happens when the money runs out. They cast around for innocent bystanders to tax and their noose draws ever tighter around the necks of law abiding citizens.

    I have often said in this forum that 100% taxes are coming. There is no way that these profligate countries are going to close the budget gap without taxing every single man, woman and child to the maximum extent possible. They will shake down every single entity until all money disappears down the black hole of government expenditure.

    The bigger question is what happens when the money runs out? We’ll probably revert back to our cavemen ancestors who bartered for goods. Money will probably become worthless by 2020.

  3. How about doing away with Income Taxes (production taxes) all together, and replace them with a Consumption tax? This would eliminate all tax avoidance strategies because the amount due in any individual Country would be collected at the point of sale.

    Wow, how simple.

    1. There is a consumption tax in Europe ( VAT ). The problem with it is that different countries can set different rates of VAT. Companies can set up in a low VAT country and sell on-line services to somebody living in a higher rate country. They charge the customer VAT rate applicable in their country of residence, but only pay the VAT due in the country where they have their accounts department. They pocket the difference, which means that they have an advantage of several percent profit margin over companies that behave ethically.

      The argument in Europe is not about taxing people more. It’s about closing these tax loopholes. There is a clearly unreasonable situation where a company like Amazon has been able to exploit the various tax loopholes so that the amount of tax paid is about the same as the grants it takes advantages of for locating in depressed areas. It’s little wonder that bricks and mortar book sellers are going bankrupt when faced with a rival who not only has vast economies of scale and lower overheads, but also keeps a proportion of the money charged as VAT.

      Individuals have no choice but to pay their fair share of taxes. It’s manifestly unjust that large corporations can get away with paying extremely low rates of tax.

      Tim Cook is right. Tax laws need to be simplified. That’s also what has been said in Europe for a while. Politicians are at least talking about changing the system, but whether that will translate into action is another matter.

      I would also add that within Europe, Apple is mostly seen to be behaving acceptably from a tax point of view ( despite the mischief stirred up Apple haters ). The real anger is being directed towards companies like Amazon, Google and Starbucks.

  4. Hmmm. I thought GE paid no tax last year…. why don’t they EVER say anything to that?
    http://www.factcheck.org/2012/04/warren-ge-pays-no-taxes/

    It’s like collection agency. If you pay, then they know you are likely to pay, so they keep licking.

    If you made $1 then you pay income tax. You then spend what’s left of your income, you pay sales tax. Then the next person spends what they made from you, they have to pay sales tax… and so on down the line. So eventually the initial $1 you earned is taxed 100%. There’s nothing left, all goes to the tax collector.

  5. MacDailyNews needs to stop doing the math, it’s hurting the Progressive cause to show how much government actually costs and how these costs have ballooned to totally unsustainable levels in recent years.

  6. The Tax Poem
    Tax his land, tax his wage,
    Tax his bed in which he lays.
    Tax his tractor, tax his mule,
    Teach him taxes is the rule.

    Tax his cow, tax his goat,
    Tax his pants, tax his coat.
    Tax his ties, tax his shirts,
    Tax his work, tax his dirt.

    Tax his chew, tax his smoke,
    Teach him taxes are no joke.
    Tax his car, tax his grass,
    Tax the roads he must pass.

    Tax his food, tax his drink,
    Tax him if he tries to think.
    Tax his sodas, tax his beers,
    If he cries, tax his tears.

    Tax his bills, tax his gas,
    Tax his notes, tax his cash.
    Tax him good and let him know
    That after taxes, he has no dough.

    If he hollers, tax him more,
    Tax him until he’s good and sore.
    Tax his coffin, tax his grave,
    Tax the sod in which he lays.

    Put these words upon his tomb,
    “Taxes drove me to my doom!”
    And when he’s gone, we won’t relax,
    We’ll still be after the inheritance tax.

  7. MacDailyNews Take: The UK’s government most recent annual spending totaled £694.89 billion. Starbucks’ extra £20 million fueled the UK government for 15 minutes and 9 seconds.

    True, but with all that caffeine, they were able to get so much more done in those 15 minutes.

  8. It’s getting ridiculous over here right now. Amazon recently got criticised for paying only £3m in tax on £4bn of sales, prompting huge numbers of outraged headlines in the newspapers. However, since when are companies taxed on turnover? Amazon run on very thin margins here in order to compete with the well organised online presence of retail giants like Tesco. As a result they don’t make much profit and therefore don’t pay much tax. That’s got nothing to do with tax avoidance, they’re simply trying to undercut their competition.

  9. Well, Starbucks had some to do if that is true. I know Starbux bayed 20 million extra, something they didn’t have to do but they did it so they brand would not be damaged which was a smart move. 20 million is nothing for the future profits and reputation gain. But they have some explaining to do if they told the tax authorities one thig and their share holders another. I don’t know which on is worse. They are both serious. They lied to someone.

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