EU ministers on 28 Nov. blocked a move by the European Commission to require multinational companies to publicly report their profits and taxes paid in each EU country.
The aim of the directive, which would make country-by-country reporting mandatory for companies with a turnover of more than EUR750 million, is to dissuade companies from shifting profits from high-tax countries to zero-tax or low-tax jurisdictions.
The EU Parliament estimates EU countries are losing between EUR50 billion and €70 billion to tax avoidance each year.
More than three years after it was proposed, 13 countries blocked the plan for legal reasons. Because it involves a tax matter, which remains under the sovereignty of each member state, the countries argued it should not have been voted on in the competitiveness council, but instead in the finance council, to give each individual member state the opportunity to veto the move.
The commission and the Finnish presidency on the other hand believe it is a single-market issue subject to qualified voting, because the plans are part of the Accounting Directive.
The Organisation for Economic Cooperation and Development adopted country-by-country tax reporting for large multinational companies as part of the Base Erosion Profit Shifting initiative, but the information is not made public.
The Cayman Islands adopted country-by-country reporting in its domestic legislation in 2017 in response to the BEPS project. The Cayman Islands Department for International Tax Cooperation established a portal for companies to report country-by-country data to the Tax Information Authority.