Comments to SEC on Proposed Rule on “Disclosure of Payments by Resource Extraction Issuers”

The FACT Coalition sent a letter to the U.S. Securities and Exchange Commission voicing concerns that the proposed SEC rule does not currently align itself with the emerging global standards around transparency of tax and payments to governments. The full letter can be read below or downloaded here.


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March 18, 2020

Vanessa A. Countryman
Securities and Exchange Commission
100 F Street NE
Washington, DC 20549-1090

Submitted electronically via

RE: Proposed Rule on “Disclosure of Payments by Resource Extraction Issuers”, File Number S7-24-19

Dear Secretary Countryman:

On behalf of the Financial Accountability and Corporate Transparency (FACT) Coalition, I appreciate the opportunity to comment on the Securities and Exchange Commission’s (SEC) proposed rule on “Disclosure of Payments by Resource Extraction Issuers” (File Number S7-24-19). While the FACT Coalition is supportive of Section 1504 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, we write to express our disappointment that the proposed SEC rule does not currently align itself with the emerging global standards around transparency of tax and payments to governments.

The Financial Accountability and Corporate Transparency (FACT) Coalition is a non-partisan alliance of more than 100 state, national, and international organizations in the United States. working toward a fair tax system that addresses the challenges of a global economy and promoting policies to combat the harmful impacts of corrupt financial practices.1

For the better part of the last decade, the Coalition and our partners have researched and written extensively on international corporate tax policy, profit shifting, and the role of low- and no-tax jurisdictions in corporate tax planning. We have engaged with experts and various market constituents — including investors, financial analysts, members of the accounting sector, academics in the field, policymakers, large companies, small businesses, and other constituencies — to ensure all stakeholders have the tax and financial information they say is necessary for functioning capital markets.

A Global Trend Toward Transparency Across All Sectors

For many years, open and transparent capital markets have made the U.S. system a model for the world. The combination of the Financial Accounting Standards Board’s (FASB) accounting principles and the SEC’s additional shareholder disclosures have provided both unprecedented opportunities and reasonable protections for investors and other stakeholders.

While certain aspects of the proposed rule are commendable, if the SEC finalizes it as drafted, the U.S. will be stepping back from its historic leadership role. Global trends are moving toward transparency. In 2014, PricewaterhouseCoopers conducted a survey of more than 1,300 CEOs around the world, and 59 percent stated that they believe multinational corporations should be required to publicly disclose basic financial information, such as revenues, profits, and taxes on a country-by-country basis.2 Just one year later, a survey of the Financial Times Stock Exchange (FTSE) 100 conducted by the UK-based charity Christian Aid found little staunch opposition when asked about whether public country-by-country reporting (CBCR) should be implemented.3 Many multinational corporations — including Vodafone, Unilever, BHP Billiton, and Rio Tinto — already publicly disclose, in varying degrees, country-by-country reports of tax and payment information. These are just a few of the examples highlighted in an April 2019 paper produced by the FACT Coalition that examined the advancements in transparency.4 The report is attached to the end of this submission.

As of March 2020, the tax authorities of the United States and 90 countries collect and privately exchange disaggregated country-by-country tax and financial reports for all large multinational enterprises, according to a standard set by the Organization for Economic Cooperation and Development (OECD) in 2015. 5

In December 2019, the Global Reporting Initiative (GRI) finalized the first global standard around public disclosure of taxes and payments to government.6 The new GRI Tax Standard, which takes effect in one year, was negotiated with a diverse set of constituencies — including representatives from major multinational corporations, investment firms, accounting firms, academia, and non-governmental organizations. While GRI’s standards are technically voluntary, 75 percent of the world’s largest companies that report their sustainability results use the GRI Sustainability Reporting Standards. Internationally, 62 countries have policies that reference or require the use of the GRI Standards for sustainability reporting — which includes capital market regulations in 45 countries. In the United States, 78 percent of the companies on the Dow Jones Industrial Average use GRI Standards for ESG disclosure. Following publication of the GRI Tax Standard, Royal Dutch Shell became the latest company to voluntarily disclose its disaggregated country-by-country reports — leading The Wall Street Journal to call it “The Beginning of the End of Tax Secrecy.”7 It is prudent to assume that thousands of additional companies will soon follow in Shell’s footsteps.

Moreover, the FASB continues to consider mandating disaggregated tax and financial disclosures in its Generally Accepted Accounting Principles (GAAP). After 100 percent of the fifty investors (managing assets in excess of $2 trillion) that commented on FASB’s earlier tax disclosure draft called for full country-by-country tax transparency, the FASB Chairman indicated that he supported jurisdiction-by-jurisdiction tax disclosures at FASB’s February 2020 board meeting. FASB is now redrafting its rule to strengthen its tax disclosures.8

Finally, in addition to the OECD, GRI and FASB disclosure regimes, companies active in the extractive industries are already subject to disclosure requirements under laws promulgated by European Union member countries, the United Kingdom, Canada, and Norway, and under the voluntary disclosure standards issued by the Extractive Industries Transparency Initiative (EITI). Notably, due to the specific nature of the oil, gas, and mining industries, these regimes require project-level payment reporting. If the SEC were fulfilling its historic leadership role, its proposed rule should match or exceed, not fall behind or below, the standards set by those other disclosure regimes.

Public Disclosure Should be Maintained and Proposed Exemption Dropped

The FACT Coalition is supportive of the SEC proposal’s provisions that would generally make the information on payments to governments available to investors and the public. Public disclosure is critical to ensuring that current and prospective investors have the necessary information to appropriately value issuers and gauge the riskiness of various investment options. Tax and payments to governments often amount to 20 to 30 percent of a multinational corporation’s global pre-tax profits, and tax rates, policies, and enforcement vary widely between different jurisdictions — underscoring the materiality of this disaggregated information. At the same time, public disclosure will also give policymakers, academics, and others a better understanding of how tax and payment policies impact differing constituencies.

That said, the FACT Coalition must express its strong opposition to the proposed exemption for reporting information in jurisdictions where local foreign laws forbid disclosure. Jurisdictions that enact secrecy laws forbidding disclosure of tax and payments to governments pose the highest risk for corruption, and it is therefore essential that they not be exempted from disclosure. Finalizing such an exemption would not only deny investors critical information to gauge whether they have invested in an issuer with major Foreign Corrupt Practices Act-related risks, it would also invite foreign jurisdictions to enact secrecy laws to free companies from U.S. disclosure obligations. In addition, such an exemption would push the SEC rule out of alignment with the approach of all other countries that have implemented similar disclosure regimes as well as with the GRI and EITI disclosure standards which offer no such exemption. Creating such an exemption — which has no statutory basis — would also call into question SEC compliance with the law’s requirement to issue a rule that “to the extent practicable” supports “international transparency” related to “commercial development of oil, natural gas, or minerals.” The Coalition urges the Commission to strike the exemption before finalizing this rule.

De Minimis Thresholds Should Be Deleted

The FACT Coalition also opposes the proposed de minimis thresholds of $150,000 (for payments) and $750,000 (for projects). Both thresholds are out of line with international standards and risk failing to provide investors with necessary information to gauge investment risks. The thresholds would lead to concealment of clearly material information for investors. For example, investors would want to know that an issuer operating in a jurisdiction has entities that record billions of dollars in revenues but pay zero dollars in taxes or fees. That is because such conduct not only incurs substantial tax enforcement and reputational risks, but also because both local and global tax policy changes that could lead to much higher expenses and taxes (as are currently being discussed by members of the OECD/G20 Inclusive Framework on BEPS) could, in turn, significantly impact shareholder value. Neither the OECD’s country-by-country reporting framework nor the GRI Tax Standard have de minimis thresholds for payments to governments. Moreover, none of the disclosure regimes requiring the reporting of extractive industries payments to governments, nor the EITI standard, have project-level de minimis thresholds. We urge the Commission to remove the de minimis threshold altogether before finalizing the rule.

Compliance Costs for Proposed Rule Are Negligible

The cost of compliance for the SEC’s proposed rule is likely to be negligible for many issuers given that:

  1. Issuers operating in the mining, oil, and gas sectors in one of the more than 50 EITI-implementing countries, and issuers with subsidiaries in any of the European Union member states, the United Kingdom, Canada, or Norway already collect and disclose their payments-to-governments publicly, at the project level, with a contract-specific project definition, in line with global standards.
  2. All issuers filing taxes with the Internal Revenue Service or the relevant tax authority in another OECD country already collect and report detailed tax payment information on a country-by-country basis (along with additional information on revenues, profits, and employment). Some of these companies have also voluntarily chosen to publish this information.
  3. A large number of issuers will soon be publicly disclosing detailed tax payment information on a country-by-country basis (along with additional information on revenues, profits, and employment) to comply with the new GRI Tax Standard, and this standard also encourages the disclosure of sector-specific payments.
  4. Of the issuers that are not subject to (a), (b), or (c), many are companies with a limited number of extractive projects in only one or a small number of countries, and this information would thus be relatively easy to compile.


Section 1504 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 is critical to ensuring that investors can properly value assets and gauge the tax and corruption-related risks of their investment options. It is also a key tool in the broader fight against illicit finance related to corruption and other crimes. We hope the SEC will improve its proposal to ensure that the final rule achieves both of these goals.

Thank you for your consideration of these comments. Should you have any questions, please feel free to contact me at +1 (202) 810-1334 or


Clark Gascoigne
Interim Executive Director

  1.  A full list of FACT members is available at
  2.  PricewaterhouseCoopers. “17th Annual Global CEO Survey: Tax strategy, corporate reputation and a changing international tax system,” 2014,
  3.  Christian Aid surveyed dozens of FTSE100 companies and found that only a small minority were wholly opposed to the idea of reporting on a country-by-country basis, while many others were indifferent or even supported more disclosure. See more:
  4.  Freymeyer, Christian, “Trending Toward Transparency: The Rise of Public Country-by-Country Reporting”, The FACT Coalition, April 2019,
  5.  Webpage, “Country-by-Country reporting,” Organization for Economic Cooperation and Development,
  6.  See: GRI 207: TAX 2019,
  7. Rochelle Toplensky, “The Beginning of the End of Tax Secrecy,” The Wall Street Journal, December 20, 2019,
  8. Nicola M. White, “Income Tax Disclosure Rules to Get New Look From Board,” Bloomberg Tax, February 12, 2020,