Country-by-Country Reporting and Other Financial Transparency Measures Affecting the European Union

Abstract

The EU faces large amounts of financial secrecy supplied to it by secrecy jurisdictions. In this chapter, we use the Bilateral Financial Secrecy Index to quantify which jurisdictions supply most secrecy to EU Member States. The chapter assesses the progress of two recent EU policy efforts to tackle financial secrecy: automatic exchange of country-by-country reporting (CbCR) data and black and grey list of non-cooperative jurisdictions. It is found that 34 per cent of the financial secrecy faced by the EU is supplied by other Member States, whose a priori exclusion from the blacklisting exercise reveals its fundamental flaw. Further 13 per cent is supplied by the EU’s dependencies, mainly the UK’s Cayman Islands, Bermuda, and Guernsey. The jurisdictions that supply the most secrecy not covered by automatic information exchange of CbCR data are the British Virgin Islands, United States, and Curacao. Finally the chapter discusses policy recommendations that stem from our analysis.

Звіт Про Платежі На Користь Держави: Кластерний Аналіз Та Причини Кластеризації

“…Початок досліджень звітів про платежі на користь держави заклали такі вчені як Мьорфі (2015), сікка (2015) та Войцик (2015), коли в своїх дослідженнях 2015 року виявили, що з появою звіту про платежі на користь держави (на той час частини нефінансової звітності) відбулись покращення у поданні податкової звітності: інформація про сплату податків нафтовидобувними компаніями була більш детальною та якісною [13]. В свою чергу Де сімон та Олберт (2019) довели, що звіти про платежі на користь держави вплинули на прозорість звітності та діяльності транснаціональних компаній (ТНК) [11].…”

Financial Crime and Punishment: A Meta-Analysis

“…The event studies have been long used to challenge the information content of a wide range of corporate news, called "events" (for example Dolley (1933), MacKinlay (1997), and Kothari and Warner (2008)). 21 The goal is to quantify an "abnormal" market reaction following the event, by deduction estimated "normal" market parameters from "actual" observed market parameters. A wide range of impact measure variables were used: returns (the most frequent, on which this work focuses), bid-ask spread, volatility, turnover, clients, cost of financing (interest rates) and financing mix (debt versus equity), top management turnover, analysts forecasts, etc.…”

Illicit financial flows and country-by-country reporting in extractive industries

“…While more comprehensive, however, it applies only to very large MNCs. Large MNCs have thus been sharing their CBCR since 2016 according to the OECD standard, but only with the tax authorities of the headquarter countries (Garcia-Bernardo and Janský 2021), only some of which, such as the US, are sharing their aggregated statistics with the public (Clausing 2020; or exchanging them with other governments (Janský et al 2021a). Most recently, in June 2021, the EU agreed that large MNCs would need to share their reports in the future with the public, albeit only in an aggregated form and without a fully global country-by-country breakdown (Rusina 2020).…”

“…In contrast, the public nature of the disclosure of the first two standards was not upheld, since according to the OECD large MNCs are only required to report to the tax authorities in their headquarter countries (the Data dimension displayed in Figure 1 and discussed below). This information can then be shared with other tax authorities (Janský et al 2021a) and, in anonymized and aggregated form, with the public (OECD 2021). While there was a lack of a developed system of quality assurance, reporting coordination, and data compilation for the first two standards (for example, with banks publishing data on their websites and differing use of concepts or aggregating), the OECD standard is more robust and tax authorities regularly peer-review each other.…”

“…The private nature of the large MNCs' CBCR standard might prove only a temporary setback for transparency since, for example, the EU approved legislation in 2021 to require large MNCs to share parts of their CBCR data with the public and there is pressure from civil society for full public disclosure (Janský et al 2021a). We might expect the first such data to be published around 2023/24 (exemplifying the often substantial time lags between discussion, approval, and publication).…”