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Just the FACTs: September 16, 2016

In recent years, large multinational corporations have increasingly become reliant on complicated tax schemes to inflate profitability and shareholder value. Apple Inc. learned recently that the public is losing their patience with those who abuse complicated loopholes in the tax system in order to play by their own rules.  The European Commission ruled that Apple accepted illegal state aid through their special tax arrangement with Ireland and will require them to repay $14.5 billion in back taxes.

Apple admitted that the decision would likely have a materially significant impact on shareholder value.  Investors in Apple were unwittingly exposed to high risk since Apple, and other multinationals, do not disclose how much tax and profits they make on a country-by-country basis.

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New Report: Investors at Risk by Lack of Corporate Tax Disclosures

Shareholders Increasingly Stymied by Opaque Corporate Tax Practices as Authorities Crack Down, Finds New FACT Analysis
Apple Tax Ruling “Just the Tip of the Iceberg”
WASHINGTON, D.C. – Investors are at an increasing risk due to the lack of information disclosed by companies about their tax practices, according to a new report published today by the FACT Coalition.

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Report Highlights Investor Risks from Anonymous Shell Companies

FACT Coalition Statement on New Global Witness and Global Financial Integrity Briefing
WASHINGTON, D.C. – A new report released today by Global Financial Integrity (GFI) and Global Witness emphasizes the importance to investors of knowing who owns and controls the companies with which they invest and with whom those companies do business.  Titled “Chancing It: How Secret Company Ownership Is a Risk to Investors,” the briefing highlights a number of financial and non-financial risks posed to companies and investors from anonymously-owned companies, and is published as global investors managing over $740 billion in assets released a letter calling on the U.S. government to adopt meaningful incorporation transparency legislation.

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Just the FACTs: September 2, 2016

It is estimated that between $7.6 trillion and $32 trillion in global wealth is secretly stashed offshore in tax havens.  A black hole in the world economy, offshore tax haven abuses drain invaluable resources from each and every country and undermine the rule of law worldwide—hampering our ability to act collectively to solve problems.  This week the European Union indicated that they will no longer tolerate these abuses.

Last week the European Union (EU) sent out a loud and clear message that “all companies, no matter their nationality, generating and recording their profits in an EU country should pay taxes in line with national tax laws”.   This week they followed through by showing the EU is willing to take steps to address aggressive tax avoidance and tax haven countries that facilitate the problem—ruling that Apple must pay Ireland roughly $14.5 billion in back taxes.

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On Apple, U.S. Should Follow Europe’s Lead – Level Playing Field for Small Business to Compete

Statement of the FACT Coalition on the E.U.’s Apple Ruling
WASHINGTON, D.C. – The European Commission today announced that Apple would have to re-pay Ireland roughly $14.5 billion in illegal tax breaks, after a three-year investigation discovered that the tech giant escaped with paying about 0.05% in taxes—compared to the official Irish rate of 12%.

Clark Gascoigne, the deputy director of the FACT Coalition, issued the following statement.

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Just the FACTs: August 19, 2016

In May, the Treasury Department released a final rule that was meant to increase scrutiny on banks to know the customers with which they do business.  Despite the fact that we believe the Treasury rule should have been much stronger, banks are on the front-line of the battle against terror financing and criminal money laundering and do have real anti-money laundering obligations.  But, there’s just one problem.  Banks are having a tough time verifying who their customers are because incorporating a company in the U.S. doesn’t require owners to disclose their real names.  Banks are now asking that the federal government change that.

The Clearing House Association, which represents the largest commercial banks, sent a letter to congressional lawmakers in support of the bipartisan Incorporation Transparency and Law Enforcement Assistance Act (H.R.4450, S.2489). The Clearing House includes major banks like Bank of America, Citibank, and JPMorgan Chase, and Wells Fargo. As FACT member  Global Witness explains, “without a way to ensure there’s comprehensive collection of beneficial ownership information for U.S. companies, it will be hard for banks to comply with new regulations that require them to find out who are the beneficial owners of their corporate clients.”

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