Multinational companies do not publicly report on where they are making their money or what taxes they are paying to whom. Investors, policymakers, and citizens have no idea exactly how they are gaming the system—what they tell us versus what they tell other countries. They should have to write it down in one place and report it on a country-by-country basis, so that the public, policymakers, and shareholders can see what they are really paying.
“We are pleased that Chair Gensler indicated today that the SEC is looking at the need for increased tax and financial reporting by big multinational companies to inform investors and other stakeholders,” said FACT Executive Director Ian Gary.
In response to a question from Senator Van Hollen in a Senate oversight hearing, Chair Gensler says the SEC is considering disclosures to give investors better insights into where corporations book profits and pay taxes.
Germany has expressed its intention to move forward with a crucial piece of the OECD’s global tax agreement, introducing legislation to create a minimum corporate tax with or without the rest of the European Union.
The Financial Accountability and Corporate Transparency (FACT) Coalition commends the Australian Treasury for its commitment to implement public country-by-country reporting (PCbCR) and submitted comments last week encouraging the adoption of PCbCR best practices. FACT encourages the U.S. Securities and Exchange Commission (SEC) to move quickly to also adopt PCbCR best practices to address information asymmetries between multinationals, investors, policymakers, and other users of financial statements.
Without public country-by-country reporting, investors have little knowledge about the tax strategies of companies they own and the degree to which they may be engaging in risky tax behavior. The Securities and Exchange Commission must address the chasm between what companies know and what they disclose to investors.
On August 16, President Biden signed the Inflation Reduction Act (IRA) into law. The IRA, among other things, creates a corporate alternative minimum tax (CAMT) that applies a 15 percent minimum tax on the largest corporations worldwide, aggregate “book” income, adjusted for certain identified tax preferences.
