European Union Negotiations Result in Missed Opportunity to Implement Global, Public Country-by-Country Tax Reporting
WASHINGTON, DC – The Financial Accountability and Corporate Transparency (FACT) Coalition today reiterated the need for quick movement on the Disclosure of Tax Havens and Offshoring Act, proposed U.S. legislation that would require multinational corporations to disclose their taxes paid and other key information publicly on a country-by-country basis, after negotiations in Europe resulted in a political agreement yesterday for limited public reporting of corporate taxes paid.
“After many years of campaigning by civil society and calls from investors, a prominent jurisdiction has finally required some public corporate tax reporting, albeit on a very limited basis,” said Ian Gary, executive director of the FACT Coalition. “The FACT Coalition, along with our civil society allies in Europe, is disappointed with the political agreement between the European Council, European Commission, and European Parliament. If formally approved, this new requirement would have many loopholes and would largely limit public tax reporting to taxes paid in Europe and not require reporting on a globally disaggregated basis.”
With the global pandemic and economic crises draining government coffers around the world, greater attention is rightly being paid to corporate tax avoidance, including by companies making huge profits. The Disclosure of Tax Havens and Offshoring Act, introduced in May in the House and Senate (H.R. 3007, S. 1545), provides a much-needed spotlight on corporate profit shifting and tax avoidance strategies, both to protect investors and inform policymakers and the public. The legislative effort is led by Rep. Cynthia Axne (D-IA) and Sen. Chris Van Hollen (D-MD).
“EU members states largely ignored the calls by civil society and investors worth more than $5.6 trillion in assets under management to require global public country-by-country corporate tax reporting,” Gary said. “It’s time for the U.S. to step up where the European Union did not and implement this much needed tax transparency measure.”
The U.S. legislation would require multinational corporations registered with the Securities and Exchange Commission (SEC), including U.S., European and other multinationals, to disclose basic financial data – including profits, taxes paid, number of employees, and tangible assets – about their operations and subsidiaries overseas. Under an international OECD framework, this country-by-country reporting (CBCR) is already privately reported to the IRS, making any public reporting burdens negligible.
In the U.S., investor groups with close to $2.9 trillion in assets under management have pushed for quick movement on the legislation and public country-by-country reporting is widely backed by a broad range of civil society groups, from labor union confederations such as the AFL-CIO, to small business groups, to economic justice, racial justice, and environmental justice organizations.
“We’re in a middle of a global crisis, but while many big multinational corporations are cashing in record profits, large-scale corporate tax avoidance continues to cost our societies billions of Euros in lost tax income every year,” said Tove Maria Ryding, tax coordinator with European Network on Debt and Development (Eurodad), in response to the political agreement. “We know that public country by country reporting can help solve this problem, and that is why we need urgent action. Sadly, today’s agreement has been watered down so much that it will not be effective.”
Notes to Editor:
- Click here to read the reaction from European civil society campaigners Eurodad.
- Click here to read the text of the Disclosure of Tax Havens and Offshoring Act.
- Click here to read a letter from European investors worth more than $5.6 trillion in assets under management calling on the EU to implement full public country-by-country reporting.
- Click here to read a letter from 66 investors representing $2.9 trillion in assets under management supporting the U.S. legislation.
- Click here to read the letter 97 civil society organizations to Congress.
- Click here to read the letter from American Sustainable Business Council, Main Street Alliance, and Small Business Majority, supporting the legislation.
- Click here to learn more about the diverse constituencies supporting for public country-by-country reporting.