Malta Outlines Last Offer on Public Country-by-Country Reports

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By Joe Kirwin

European Union-based multinational companies that exceed consolidated revenue of 750 million euros ($840 million) for two consecutive years would have to report publicly on taxes paid, profits earned, and persons employed on a country-by-country basis, under a proposal from Malta.

Malta holds the EU presidency, a position it will turn over to Estonia July 1.

The country-by-country report data, however, couldn’t by itself be used to “constitute conclusive evidence that transfer prices are or are not appropriate,” according to documents seen by Bloomberg BNA. The documents said the information shouldn’t be used as a substitute for “a detailed transfer pricing analysis of individual transaction prices.”

The Maltese presidency proposal also states that the responsibility of a subsidiary of a non-EU-based multinational to provide details of the parent company’s country-by-country report “should be limited.”

When the information or report isn’t provided, the subsidiary “should publish and make accessible a statement as to why the report on income tax information could not be published and made accessible,” the Maltese document said.

Commission Study on Non-EU Reporting

The proposal calls for the European Commission to “consider issuing a recommendation” on “how to ensure that global disaggregation may be achieved particularly in international fora.” The call is in reference to the controversial issue of whether EU-based multinationals must publicly disclose country-by-country report data on their subsidiaries based outside the EU.

The proposal will be handed over to Estonia as it assumes the rotating EU presidency from July 1. Maltese presidency spokesman Anis Cassar told Bloomberg BNA that Malta never brought the proposal before EU member nations in the Council of Ministers because it “is still being discussed at the technical level. It is still not mature enough to be discussed by ministers at the Council.”

The latest Malta proposal comes as the European Parliament is due July 5 to vote on its terms for the public country-by-country reporting legislation. Based on amendments approved in a joint committee vote earlier in June, multinational companies with an annual turnover of 750 million euros would be required to publicly disclose profits earned and taxes paid on a country-by-country basis but could request an exemption on an annual basis if the data is deemed “seriously prejudicial to the commercial position” of the company.

The commission proposed in April 2016 that all multinational companies based in the EU with a 750 million euro turnover should have to publicly disclose tax, profits, and employees on a country-by-country basis. It also called for EU-based multinational companies to publicly disclose country-by-country reports for subsidiaries outside the EU only on an aggregate basis.

Industry Opposition

EU-based industry groups have lobbied intensively against the proposal for public reporting, insisting that it would hurt their competitiveness because none of their global competitors in the U.S. and China will be required to publicly disclose the data. Groups led by BusinessEurope insist that the EU should stick to the Organization for Economic Cooperation and Development‘s base erosion and profit shifting reforms, which require the country-by-country reports to be submitted to tax authorities but don’t require them to be made public.

However, others point to EU rules approved in 2013 as part of a revision to the EU Capital Requirements Directive in the wake of the 2008 financial crisis that require large financial institutions, including EU-based banks, to publicly disclose profit and tax reporting on a country-by-country basis. Tommaso Faccio, a lecturer in company tax law at the University of Nottingham in the U.K., told Bloomberg BNA in a June 26 email that the EU Capital Requirements Directive “shows that this information is generally available and can be put together fairly easily, particularly given that multinational enterprises will have to produce CBCR for tax authorities. So collecting this information and tweaking it to make it in line with the format required by the directive should not be too cumbersome.”

Faccio said that only the defense and security industries should be allowed the exemption on the “prejudicial to commercial interest” basis.

To contact the reporter on this story: Joe Kirwin in Brussels at correspondents@bna.comTo contact the editor responsible for this story: Penny Sukrahj at

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