The Power of Transparency

Tove Maria RydingEurodad

Tax for Development - The Role of European Policy Makers

Different types of transparency

Country by Country Reporting Beneficial Ownership

- For the public:

Different types of transparency

Automatic information exchange

- For tax administrations:

Different types of transparency- Country-by-country reporting: Would give us a “map” of

multinational enterprises – showing where they pay taxes, where they make profits, where they have subsidiaries, employees, etc. = We can expose tax dodging and demand fair taxation.

- Beneficial Ownership: Would show us who owns shell-companies, secret trusts, etc. = Less tax evasion

- Automatic information exchange: Would mean that tax administrations receive information and could find hidden bank accounts in ex. Switzerland = More tax income

What progress are we seeing?- Country-by-country reporting: Capital Requirements Directive

gave us full and public country by country reporting for banks in the European Union.

- Beneficial Ownership: Is right now being discussed in the EU – we might see a decision before the end of 2014. Public registries are an option!

- Automatic information exchange: FATCA (for the US) and the “Offshore Leaks” led to EU regulation and a G20/OECD standard.

Who is driving the change?- Country-by-country reporting: Capital Requirements Directive

gave us full and public country by country reporting for banks in the European Union. European Parliament + investigative journalists

- Beneficial Ownership: Is right now being discussed in the EU – we might see a decision before the end of 2014. Public registries are an option! European Parliament

- Automatic information exchange: FATCA (for the US) and the “Offshore Leaks” led to EU regulation and a G20/OECD standard. US, followed by EU and G20 countries + investigative journalists

What progress are we not seeing?

- Country-by-country reporting: Public CBCR for all sectors and all regions

- Beneficial Ownership: Public BO information (except perhaps in the EU – if the member states agree to the European Parliament proposal)

- Automatic information exchange: Automatic information exchange with the poorest countries. Due to requirements of “reciprocity” and a lack of political will to give them information.

The role of OECD and G20…According to themselves:

- ”Major step forward for transparency” – OECD, 2014 (about the new OECD standard for country-by-country reporting)

- ”You multinationals stand ready – it’s over!” – Pascal Saint-Amans, 2014 (about the outcomes of year one of the OECD process on base erosion and profit shifting (BEPS))

- “The era of banking secrecy is over” – G20, 2009- “What we are witnessing is nothing short of a revolution. By

addressing the challenges posed by the dark side of the tax world, the campaign for global tax transparency is in full flow.” - OECD Secretary-General Angel Gurría, 2009

- For tax administrations (in rich countries)

The role of OECD and G20…The other side of the story:

- ”Major step forward for transparency” – The proposal has a good template, but by demanding ”confidentiality”, it is actually to roll back the EU directive and make public CBCR confidential

- ”You multinationals stand ready – it’s over!” – ”transparency is great, but it doesn’t mean that the information should be everywhere... We have challenges in terms of making sure the information is protected, is held confidentially, and is shared only with tax administrations, but that this process is done in an efficient, timely manner. If the process doesn’t happen quickly, pressure may well grow to make the information public”.

- “The era of banking secrecy is over” (2009) Obviously not.

What should policy makers do?- Walk the talk and don’t misinform the public- We need progress at:

- National level: Move first!- EU level: Binding regulation!- UN level: Cooperate with developing countries

Deliverables:- Public country by country reporting for all sectors- Public registries of Beneficial Owners- Automatic information exchange – also with the poorest

countries

Thank you !