The European Parliament last week approved country-by-country reporting for multinationals firms but the rules will only apply to those with revenues greater than €750 million, leading to claims the tax rules are a 'facade'.

The tax rule will mean that those companies will have to file a country-by-country report in the EU member state in which the ultimate parent entity of the group is resident for tax purposes.

However, Euractiv points out that, according to OECD data, only 10 per cent of companies will actually be liable to report tax under the law: “the reporting system’s high threshold would exclude some 85-90°% of multinationals”.

EU efforts “merely a facade”

The news portal wrote that: “the EU’s efforts to improve tax transparency by enforcing country-by-country reporting for businesses’ activities are merely a facade.”

Socialist MEP (S&D) Emmanuel Maurel said that the threshold of €750 million “makes no sense. It should be much lower.” The Socialist Party submitted an amendment for the threshold to be €40 million but this was rejected in the Parliament's vote on Thursday.

However, the European Parliament called it "a positive step in the fight against aggressive corporate tax planning". The report was approved by 567 votes to 30 with 53 abstentions.

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CTMfile take: It's hard to see how exactly this can be seen as a “positive step in the fight against aggressive corporate tax planning”. It's also a serious issue as the UK approaches the so-called 'Brexit' referendum. If transparent, fair systems of taxation can only be achieved within the framework of a supranational legislative body, then shouldn't the EU be doing much more than this?