Maybe your business would be harmed if you disclosed your entire corporate structure. Fine. Then stay under cover, but make sure you‘re responsible and pay your fair share.

SECOND BEST OPTION. Expecting the objection that – although optional – the disclosure of the entire corporate structure and the global effective corporate tax rate could have possble negative influence on business operations, an alternative option is offered. If a multinational company present in the EU wishes to avoid any corporate structure or global effective corporate tax rate disclosure, it is sufficient that it makes sure it is able to prove to competent authorities that in the preceding fiscal year it paid world wide in corporate tax more than 11,25% of its profits.

ANTICIPATING BUSINESS REACTION. One can suppose that a large number of companies whose global effective corporate tax rate was below the disclosure threshold of 11,25% would try to increase this rate over the aforementioned threshold in order to escape the disclosure obligations. It can be reasonably assumed that if there was a possibility of obligatory corporate structure disclosure, a number of companies would prefer to increase its global effective corporate tax rate to avoid this disclosure.

WHY THE 11,25%* THRESHOLD? The rate of 11,25% - representing the ratio of (i) the sum of money effectively paid in corporate tax in preceding fiscal year by all companies within the corporate structure up to the ultimate beneficial owners for the previous fiscal year*, and (ii) the sum of gross operating profit posted in the same year by all companies within the corporate structure up to the ultimate beneficial owners).– is an average of the statutory corporate tax rates of two EU Member States with the lowest statutory corporate tax rate, namely Bulgaria (10%) and Ireland (12,5%). Since the proposed rule is intended to apply only to conglomerates subject to corporate tax in at least two EU Member Statesit would not make any multinational company paying the statutory corporate tax rate in any two EU countries subject to disclosure obligations.

* If the taxparent mark was obligatory for all EU corporations present in at least two Member States, the maximum limit would have to be the average of the two EU Member States with the lowest statutory corporate tax rate, namely Ireland (12,5%) and Bulgaria (10%) – average 11,25% . If the taxparent mark is to be used voluntarily by any corporation in the EU, the minimum threshold for its attribution would have to be 10% (corresponding to the lowest statutory corporate tax rate applied in an EU Member State, i.e. Bulgaria).