Proposal Could Turbocharge Revolution in Global Tax Reporting Standards
Washington, DC – The Financial Accountability and Corporate Transparency (FACT) Coalition submitted comments to the Australian government Friday applauding draft legislation to require large multinationals doing business in Australia to publish key tax and other operational data on their global operations. The draft legislation, expected to pass in the coming months, would be the first true, global public country-by-country reporting (PCbCR) regime advanced by any major jurisdiction.
“The Australian government can seize the opportunity to lead a transformation in global tax policy by swiftly advancing this draft legislation,” said Ian Gary, executive director of the FACT Coalition. “For years now a diverse coalition of transparency advocates, lawmakers, academics, investors, and other interested parties have demanded public reporting data to combat rampant tax dodging by large corporations, assess corporate governance risk, and inform tax policy to better address the challenges of the new digital, global economy. The wide-reaching, durable framework introduced by this draft legislation will serve as a model for other jurisdictions considering their own tax transparency proposals, and hopefully spur action on new tax transparency requirements in the U.S. and abroad.”
In its comments, FACT welcomed the application of strong reporting requirements largely in line with – and in some cases improving upon – the Global Reporting Initiative’s tax transparency standard for a wide variety of multinational enterprises (MNEs), including entities headquartered outside of Australia. FACT also made a number of recommendations to ensure the ultimate efficacy of the proposed PCbCR regime, including:
- Clarifying that reporting requirements apply to any jurisdiction in which a given multinational enterprise has a legal, physical, financial, or other presence;
- Incorporating GRI reporting recommendations covering industry-related and other taxes or payments to governments in the final legislation;
- Ensuring that exemptions to reporting requirements are granted according to a transparent, consistent standard, and are publicly reported by the Australian government on a yearly basis;
- Limiting the use of exemptions that apply to entire entity classes, as well as those granted to government-related entities.
“As global multinational enterprises begin reporting under this new Australian regime – including U.S.-based multinationals – the need for a consistent standard to be applied across jurisdictions only grows,” said Gary. “The U.S. Securities and Exchange Commission has the authority to require public country-by-country reports in line with Australia’s groundbreaking draft legislation, and should move quickly to minimize information asymmetries that may arise from competing disclosure regimes. Doing so would provide investors, lawmakers, and other stakeholders with comparable, consistent information that they have been asking for.”
Notes to the Editor:
- Read the latest FACT Sheet on the need for the U.S. Securities and Exchange Commission to mandate PCbCR for large registered MNEs.
- Read FACT’s full comments on the Australian Government’s draft PCbCR legislation and accompanying materials. The Australian government’s exposure draft legislation and accompanying explanatory materials can be found here.
- In September, FACT submitted recommendations to the Australian Treasury in response to an invitation to comment on a consultation regarding Multinational Tax Integrity and Tax Transparency.
- FACT’s comments were endorsed by Oxfam America, which has filed shareholder proposals with Exxon, Chevron, and ConocoPhillips calling on the oil companies to issue public country-by-country reports.