This week an important vote is due to be cast by Members of the European Parliament in Brussels. On Thursday 25 February, MEPs are set to vote on whether EU Member States should be able to exempt micro businesses – those with less than 10 employees – from the requirements of the current EU financial reporting regime.
Whilst this is not the end of the road for this debate (the proposal will also have to go through the European Council), it is an important step towards a more appropriate financial reporting regime for the smallest businesses.
If the EU gives its seal of approval, Member States will be provided with the much-needed flexibility to launch their own debates, at a national level, about the best reporting regime. It would also allow for the requirements to be better tailored to meet national tax and other legal obligations, which vary considerably between Member States.
The ICAEW is a keen advocate of simplification where possible. On this issue there is scope for simplification, as there is no need for uniform laws across the EU.
Being pro the option of exemption does not, I must stress, mean that we think all reporting obligations on micro businesses should be abolished. It is important to distinguish between the reporting obligations that are necessary for the protection of the public interest and those that could be removed.
UPDATE 24/2/2010 - THE EUROPEAN PARLIAMENT HAS JUST DECIDED TO POSTPONE THE VOTE ON THIS UNTIL ITS NEXT PLENARY SESSION IN MARCH