Colm Brophy (Dublin South West, Fine Gael) | Oireachtas source

I move:

That Dáil Éireann:

(1) notes the agreed Report of the Standing Order 112 Select Committee under Standing Order 114 on the Proposal for a Directive of the European Parliament and of the Council amending Directive 2013/34/EU as regards disclosure of income tax information by certain undertakings and branches, COM(2016)198, which was laid before Dáil Éireann on 9th June, 2016 in accordance with Standing Order 114(3)(b);

(2) having regard to the aforementioned Report, and in exercise of its functions under section 7(3) of the European Union Act 2009, is of the opinion that COM(2016)198, Proposal for a Directive of the European Parliament and of the Council amending Directive 2013/34/EU as regards disclosure of income tax information by certain undertakings and branches, does not comply with the principle of subsidiarity for the reasons set out in paragraph 3 of the Report; and

(3) notes that, pursuant to Standing Order 114(3)(d), a copy of this Resolution together with the aforementioned Report shall be sent to the Presidents of the European Parliament, the Council and the Commission."

As chairperson of the select committee, I am pleased, on its behalf, to move the motion for a reasoned opinion on the proposal for a directive of the European Parliament and of the Council amending Directive 2013/34/EU as regards disclosure of income tax information by certain undertakings and branches.

The Lisbon treaty provides important power for national parliaments in the EU legislative process. Under its provisions, national parliaments have a right to object to EU draft laws in the form of a reasoned opinion. National parliaments must consider whether proposed new legislation complies with the principle of subsidiarity. This power must be used by national parliaments within eight weeks of the publication of proposed new EU legislation. The eight week deadline for this falls today.

In the EU context, subsidiarity is a concept about the level of governance at which an action should be taken. It is based on the presumption that the action should be taken at the lowest level of governance consistent with the subject matter and the objective to be attained. The procedure set out in the Lisbon treaty is that if one third of national parliaments send reasoned opinions indicating that a proposal does not comply with the principle of subsidiarity, the draft directive must be reviewed by the European Commission. The Commission can then decide to maintain, amend or withdraw the directive and must give reasons for its decision. Although this threshold is unlikely to be reached in this case, the committee is still of the belief that it is important for this Parliament to strongly express its view and to do so through a reasoned opinion.

With regard to the background to this, the Dáil ordered the establishment of the Standing Order 112 Select Committee on 10 March. This was done to ensure that the Dáil had a voice on EU legislative matters. The committee was given responsibility to carry out the parliamentary functions associated with the Lisbon treaty. The committee first considered this proposal for a directive on 11 May and decided that the proposal needed detailed scrutiny. The committee sought and received submissions from stakeholders and these were considered on 1 June. The committee discussed the proposal for a third time in public session on 8 June with assistance from the Department of Jobs, Enterprise and Innovation. That Department conducted a public consultation which closed on 20 May. The committee was briefed on the summary results of this consultation. The committee sought submissions from a number of stakeholders ranging from Christian Aid to the Irish Tax Institute. In general, the same issues and concerns were raised in those submissions. Following this meeting of the committee, it was agreed that a reasoned opinion was justified in this case.

On 9 June the committee met again and agreed the report that is now being debated. The report sets out the grounds for the Dáil to send a reasoned opinion to the EU institutions. As is clear from the committee's engagement, the decision to bring this matter to the House was not taken lightly. I understand this will be only the fifth time the Dáil has considered the adoption of a reasoned opinion under the treaty.

The Commission's proposal in this case supplements a recently adopted directive on administrative co-operation which already obliges large multinationals to report taxes paid on a country-by-country basis to tax authorities and also provides for those authorities to share that information with each other. The Commission hopes that the publication of some of this information will allow public scrutiny of corporate tax arrangements. I believe it is fair to say that the committee is very supportive of this objective of the Commission and it made that view clear..

The Commission proposal, if passed, will apply to multinational companies, European or not, which are based or have a subsidiary or branch in the EU, where they have a consolidated turnover of €750 million. It appears that somewhere between 47 and 95 companies with Irish based parents will fall within the scope of the proposal. Under the proposal, companies will be obliged to prepare a report that sets out the corporation tax that a multinational pays in each EU member state and where it operates. This is commonly referred to as country-by-country reporting. The same information must be provided for each non-co-operative tax jurisdiction in which the multinationals are active and, for the rest of the world, multinationals need only prepare or give an aggregate for all corporation tax paid. The proposal also provides that the Commission will prepare a list of non-co-operative tax jurisdictions. This will be done by delegated act, in consultation with the European Parliament and member states. This element of the proposal was developed by the Commission at a late stage in the drafting and was not part of the impact assessment.

The committee's view is that any assessment of the tax status of countries is one for members states' own tax authorities and Finance Ministers, based on tax principles. EU Ministers for Finance have recently agreed to prepare a similar list for tax purposes.

Having considered the proposal in great detail, and it is important to note the committee considered it in the context of subsidiarity, the committee agreed that issues of concern arise in terms of the principle of subsidiarity. I will summarise briefly the reasons the committee came to this conclusion. The committee is of the opinion that the proposal relates to tax policy rather than accounting practices, as tax policy is clearly a competency of member states, a breach of the principle of subsidiarity has therefore occurred on that basis. The committee also found that the Commission had failed to show that it is better placed than member states to develop a list of tax havens. On this basis the committee concluded that this action is a breach of the principle of subsidiarity.

Accordingly, I commend the committee's draft reasoned opinion that the proposed directive does not comply with the principle of subsidiarity as set out in the Lisbon treaty. If this draft reasoned opinion is agreed by the Dáil, it will constitute the House's formal response under the Lisbon treaty.

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