The European Parliament and EU member states are negotiating new European rules that will require multinationals to disclose taxes paid in each member state. In an interview with BNR Nieuwsradio, Peter Kavelaars, Professor of Economics of Taxation at Erasmus School of Economics, says he does not feel positive about the new plans.
The disclosure of tax data is also called ‘country-by-country reporting’. According to many, this is necessary because large companies are paying too little tax. Kavelaars says the plan does not make sense and may even harm companies. ‘The information that the EU wants to make public must already be provided by companies. However, it is only visible to the tax authorities at the moment.'
According to Kavelaars, there are a few drawbacks to the plan. ‘The competitive position of companies can be damaged. They have to provide company data and information. From a competition point of view, that is less desirable.’ In addition, Kavelaars says that the proposal is also not necessary since there are already other proposals from the OECD and the EU. ‘They are working towards a worldwide minimum tax. That means that sufficient taxes are paid everywhere.’
According to Kavelaars there is also a misunderstanding about the so-called ‘rulings’. These are agreements between companies and the tax authorities. The idea that less tax would be paid because of these agreements is incorrect. The idea behind the rulings is that they provide certainty about situations in which the tax legislation is not entirely clear. It does not, therefore, lead to agreements about paying less tax than would be due.