Updated with new analysis.
Update 2: on a third round, the proposal has failed in the national assembly. This is far from the end of it.
STOP PRESS: We’ve just heard that the French National Assembly has voted in favour of public — yes, public — country-by-country reporting. As a member of Plateforme Paradis Fiscaux et Judiciaires (PPFJ,) a French partner network has noted, via email:
“French deputies have just taken a decisive step forwards in the fight against tax cheating. They have in effect adopted a fiscal transparency measure, public country by country reporting, which will oblige French companies to publish information about their activities and the taxes they pay in all the countries where they operate.”
This is a major victory for transparency campaigners: congratulations to all involved. The vote still has to go to the Senate, and then back to the National Assembly — so it certainly isn’t in the bag yet — but this is already an important victory. A marker has been set. The French National Assembly proceedings are available here.
Christian Aid subsequently adds in an email, by way of detail:
“It will require companies above a certain size that trade internationally to submit wide ranging economic data about their activities to public scrutiny.
This must include details about their subsidiaries, turnover, profits, employees, subsidies/grants received, and taxes paid, broken down by country, for every jurisdiction in which they operate.
At present, multinationals can amalgamate the accounts of all their separate parts and present global totals, making such information impossible to obtain.
Tax justice campaigners, however, have long called for public country-by-country reporting for multinationals to help thwart tax dodging.
With International Monetary Fund staff estimating that through a range of techniques, developing countries could be losing around $200bn a year to tax avoidance by multinationals, it would enable revenue authorities and civil society organisations in developing countries to spot potential abuse.
In addition, it would allow investors to identify risks related to a company’s tax behaviour, and demand explanations.
Joseph Stead, Christian Aid’s Senior Economic Policy Advisor said: “The legislation must still be agreed by the Senate, but it looks like the country that gave the world liberté, égalité et fraternité is now going to give us liberté, égalité et transparence.”
For context, we had recently been severely disappointed by OECD proposals to require multinational corporations to report on every country where they do business, but dissemination of this information is to be – following heavy lobbying by multinationals and the Big Four accounting firms – heavily restricted.
Now France has shown the way forwards. The arguments against public country by country reporting are indefensible – and for this reason we’re confident that over time countries will be obliged, eventually, to follow this lead. Après eux, le déluge?
More details to follow, in due course.
As we reported earlier:
“Later today the French National Assembly will be voting on whether to adopt full country-by-country reporting. This is an important vote, which the government appears to want to block. Why? The most plausible reason is because of ferocious corporate lobbying to prevent this information from entering the public sphere.
According to companies, information about tax payments is commercially sensitive and should be kept secret. This argument cannot go unchallenged. Tax schemes are in no way comparable to confidential client data, or in-house production techniques, or anything that might profer genuine commercial advantage. The only reason for demanding confidentiality on tax matters is to avoid disclosing tax avoidance schemes. What the company directors fear is that CBCR will reduce the tax avoidance possibilities, leading to a fall in value of their inflated stock options.
The National Assembly should emphatically reject the special pleadings of the corporate lobby, which – with very few honourable exceptions – has been proved incapable of acting with integrity on tax matters.”
For the French readers among you, read Thomas Piketty’s blog on this matter in today’s edition of Le Monde.”