33 members of Congress sent a letter to the OECD supporting implementation of Country-by-Country Reporting rules in the OECD tax transparency guidelines. The full letter can be read below or downloaded here.
____________________
March 6, 2020
Mr. Angel Gurría
Secretary-General, OECD
2, rue Andre Pascal
75016 Paris
France
RE: Public Consultation: Review of Country-by-Country Reporting (BEPS Action 13)
Dear Secretary-General Gurría,
Thank you for the opportunity to comment on the OECD country-by-country reporting rules as part of your review process. As Members of Congress, we are focused on making the tax system fairer for working families by ensuring that multinational corporations are paying their fair share. The OECS country-by-country reports are an important first step, and we encourage you to build on this progress by strengthening the standards for country-by-country reporting and requiring public disclosure of these reports.
Country-by-country information should be publicly available
Large multinational corporations use a variety of accounting maneuvers to shift profits into tax haven countries to avoid taxes in countries like the United States where they operate. Country-by-country reports from individual corporations are not currently public, but the Internal Revenue Service has published alarming figures on tax haven abuse by aggregating the data it receives in these reports. For example, U.S. corporations booked $32 billion of profits in Bermuda in 2017, despite having only 547 employees there.
Public country-by-country reports would shoe which corporations are booking profits in tax havens, and better inform future policy changes regarding international corporate taxation. Investors face heightened financial risk when they lack access to complete information about a company’s tax strategy, valuation, and management approach. In the U.S. and countries around the world, policymakers, investors, and citizens would all benefit from more transparency from multinational corporations.
Reporting standards should be aligned with the Global Reporting Initiative (GRI) model
GRI sets reporting standards used by 78 percent of companies in the Dow Jones Industrial Average and 75 percent of NASDAQ 250 companies, and the GRI country-by-country reporting standard that should inform your deliberations. GRI developed this standard in consultation with multinational corporations, accounting firms, academics, and other stakeholders in addition to investors. Broadly speaking, aligning the various country-by-country standards would ease recordkeeping burdens for businesses and present a clearer picture to users of these reports.
The GRI standard requires multinational corporations to report their operations in each country on a consolidated basis, rather than an aggregated basis, which presents a more accurate picture of corporate activity in each country. When a corporation has multiple subsidiaries in the same country that engage in transactions with each other, aggregated reports can present an exaggerated picture of the level of business activity in that country.
Requiring more multinational corporations to file reports deserve serious consideration
The OECD’s current standard currently requires country-by-country reports from companies with annual revenues of at least €750 million ($850 million), exempting many large multinational corporations that may be engaged in tax avoidance. We are pleased to see the OECD considering a lower threshold for requiring multinational corporations to report country-by-country information. A more complete picture of multinational corporate finances would improve tax administration and enforcement, especially with regard to developing countries with fewer very large corporations.
Thank you for your consideration.
Sincerely,
Chris Van Hollen
United States Senator
Sheldon Whitehouse
United States Senator
Richard J. Durbin
United States Senator
Bernard Sanders
United States Senator
Elizabeth Warren
United States Senator
Tammy Duckworth
United States Senator
Edward J. Markey
United States Senator
Jack Reed
United States Senator
Cory A. Booker
United States Senator
Sherrod Brown
United States Senator
Amy Klobuchar
United States Senator
Tammy Baldwin
United States Senator
Richard Blumenthal
United States Senator
Cindy Axne
Member of Congress
Lloyd Doggett
Member of Congress
Eleanor Holmes Norton
Member of Congress
Stephen F. Lynch
Member of Congress
Jan Schakowsky
Member of Congress
Barbara Lee
Member of Congress
Peter A. DeFazio
Member of Congress
Donald S. Beyer Jr.
Member of Congress
Jennifer Wexton
Member of Congress
Mark Pocan
Member of Congress
Sean Casten
Member of Congress
Ayanna Pressley
Member of Congress
Jesus G. “Chuy” García
Member of Congress
Mary Gay Scanlon
Member of Congress
Rosa L. DeLauro
Member of Congress
Madeleine Dean
Member of Congress
Pramila Jayapal
Member of Congress
Ro Khanna
Member of Congress
Rashida Tlaib
Member of Congress