French Assembly acts against multinational tax dodging

By agency reporter
December 7, 2015

Christian Aid and tax justice campaigners have hailed as a “major breakthrough” a vote by the French National Assembly to introduce a new law that will help curb the tax dodging activities of multinationals.

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 $200 billion 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 transparencé.

“It was Voltaire who said ‘in matters of taxation every privilege is an injustice’. Never has this been truer than today when many large global companies effectively have the privilege of deciding where they declare profits and therefore how much tax they pay.

“Although the proposed law agreement does not cover all the information that would ideally be available, it is a significant step forward, with France’s willingness to act contrasting starkly with the UK.

“While the French Assembly has been voting on this law, in the UK Ministers have failed yet again to bring their tax havens into line, with their demands for greater transparency openly flouted by some of the UK Overseas Territories.

“This move by the French puts pressure to the British Prime Minister to secure real transparency in the UK and its backyard ahead of his anti-corruption summit next year.”

The law will affect companies with a turnover of over €20 million, sales over €40 million and more than 250 employees, or any combination thereof.  This is similar to EU wide legislation that currently exists for banks as part of the Capital Requirements Directive.  A Senate vote on the law is expected next week.

* Christian Aid http://www.christianaid.org.uk/

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