Trending Toward Transparency

The Rise of Public Country-by-Country Reporting

There is a growing chorus of individuals and organizations speaking out on the value of tax transparency and, in particular, the public country-by-country reporting (CBCR) of certain financial information for multinational companies, according to this April 2019 report published by the Financial Accountability and Corporate Transparency Coalition (FACT Coalition).

Titled “Trending Toward Transparency: The Rise of Public Country-by-Country Reporting,” the report highlights the growing support among various sectors of the investing, business, and policymaking communities as well as several enacted and proposed rules around the world to mandate increased disclosures.

Investors and Analysts
  • The United Nations’ Principles for Responsible Investment, a network representing investors with more than US$70 trillion in assets under management, has called on companies to publish tax information on a country-by-country basis and to become more transparent on their overall approach to tax policy and how it interacts with their broader business and sustainability strategy.
  • Norges Bank Investment Management, which manages the Norwegian sovereign wealth fund with US$915 billion in assets under management, has stated that “multinational enterprises should publish country-by-country breakdowns of how and where their business model generates economic value, where that value is taxed and the amount of tax paid.”
  • The Certified Financial Analysts’ Institute, with 137,000 members in 150 countries, highlighted the importance of tax disclosures as a vital source of information for investors in comments to the Financial Standards Accounting Board.
  • The Global Reporting Initiative, a standard-setting body that lists 75 percent of NASDAQ 250 companies and roughly 13,000 different entities as adhering to its reporting guidelines, recently proposed new tax transparency standards that include public CBCR.
  • As of March 2019, the tax authorities of the United States and 77 countries collect and exchange country-by-country reports according to a standard set by the Organization for Economic Cooperation and Development (OECD).
  • The EU Capital Requirements Directive IV (CRD IV), which was signed into law in 2013, requires large banks and other financial institutions within the European Economic Area to publicly disclose a variety of information on a country-by-country basis.
  • The EU Accounting Directive, an industry-specific reporting guideline passed in 2013 and aimed at increasing transparency within designated sectors, calls for firms active in the extractive industries or logging of primary forests that meet specific firm-size thresholds to publicly report certain financial and tax information.
  • The Canadian government enacted the Extractive Sector Transparency Measures Act (ESTMA), which brings Canadian companies in the oil, gas, and mineral sectors under CBCR-type requirements.
  • The UK Parliament gave the UK’s tax agency, HM Revenue & Customs, the authority to compel multinationals to publish country-by-country reports, upon request.
  • The European Parliament and European Commission have approved different versions of a proposal mandating public CBCR for large companies doing business in Europe; the Council of the European Union has yet to pronounce itself on the issue.
Businesses and CEOs
  • In 2014, PwC conducted a survey of more than 1,300 CEOs around the world, and 59% stated that they believe multinational corporations should be required to disclose basic financial information, such as revenue, taxes paid, and number of employees on a country-by-country basis. And just one year later, a survey of the Financial Times Stock Exchange (FTSE) 100 conducted by the UK-based charity Christian Aid found little staunch opposition when asked about whether public CBCR should be implemented.
  • Vodafone, Unilever, BHP Billiton, and Rio Tinto are among the multinational companies that publish, in varying degrees, country-by-country reports of tax and payment information.

A growing number of stakeholders, including investors, private sector companies, and policymakers, are beginning to understand the benefits of tax payment transparency. Public country-by-country reporting is an effective and workable tool for companies to increase trust among the public, while providing key stakeholders with the information needed to better assess risks associated with aggressive corporate tax planning and profit shifting.

Lawmakers in Congress, regulators at the Securities and Exchange Commission, or policymakers at the Financial Accounting Standards Board should mandate public country-by-country reporting.  At a minimum, to effectively identify and appreciate the impacts of international tax-related information on a company’s performance and valuation, investors need the following information:

  • Number of entities;
  • Names of principle entities;
  • Primary activities of entities;
  • Number of employees;
  • Total revenues broken out by third-party sales and intra-group transactions of the tax jurisdiction and other tax jurisdictions;
  • Profit/loss before tax;
  • Tangible assets other than cash and cash equivalents;
  • Corporate tax paid on a cash basis;
  • Corporate tax accrued on profit/loss;
  • Reasons for any difference between corporate tax accrued on profit/loss and: (a) the tax due if the statutory tax rate is applied to profit/loss, and (b) the tax due if the statutory tax rate is applied to profit/loss before tax; and
  • Significant tax incentives.

The numbers in each of the above categories should reconcile with the global totals to limit the opportunity for accounting gimmicks to obscure an accurate representation of the data.

In addition to country-by-country reporting, investors would have a much greater ability to understand a company’s international tax strategy and risk profile if U.S. regulators further specified in modest rules changes or, if appropriate, guidance that public companies should:

  • divide their domestic U.S. income tax into current, deferred, and cash paid to federal and state governments;
  • explain any effective tax rate that is significantly lower than the statutory rate in the countries in which they do business;
  • use the company’s weighted average statutory rate based on geographic revenue mix instead of home country statutory rate in the tax rate reconciliation schedule (which would help explain the likely effective tax rate, especially as worldwide rules change);
  • explain any large or increasing Unrecognized Tax Benefit (UTB) balance and delineate the cost of specific significant benefits in the UTB reconciliation;
  • disclose for all non-de minimis intracompany debt transactions, the countries where the debt is held, the amount of the debt, and the average interest rate “paid” by the relevant subsidiary on that debt;
  • disclose and explain any material tax incentives or benefits provided by a foreign jurisdiction, including the estimated tax savings, any conditions attached to the incentive or benefit, and the likelihood that the incentive or benefit may be lost; and
  • disclose of any legal proceedings by foreign governments related to taxes paid to any such government, regardless of whether such matter is material to the financial position of the corporation.

Collectively, these enhanced disclosures are essential for investors to effectively value and assess the risks related to the public companies in which they have invested.

The FACT Coalition would like to thank the William and Flora Hewlett Foundation for supporting this report.

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Cover Design: Clark Gascoigne and Jacob Wills, The FACT Coalition


Copyright © 2019 The FACT Coalition. Some Rights Reserved.

This work by the FACT Coalition is licensed under a Creative Commons Attribution 4.0 License.  To view the terms of this license, visit

The recommendations are those of the FACT Coalition.  The views expressed in this report are those of the Coalition and do not necessarilly reflect the views of our funders or those who provided review.

Founded in 2011, the Financial Accountability and Corporate Transparency (FACT) Coalition is a non-partisan alliance of more than 100 state, national, and international organizations working toward a fair tax system that addresses the challenges of a global economy and promoting policies to combat the harmful impacts of corrupt financial practices. More information about the coalition can be found at the back of this report or on the FACT Coalition website at

Christian Freymeyer

Christian Freymeyer is a writer, researcher, and current Master’s degree candidate at the Johns Hopkins University Paul H. Nitze School of Advanced International Studies, where he studies development, emerging markets, and economics.

He has extensive experience in the tax and financial transparency field, previously working with the Financial Transparency Coalition, a global organization fighting illicit financial flows. At the FTC, he worked at the confluence of the organization’s policy and media work, developing policy briefs, digital projects, and organizing capacity building events, including journalist trainings across the Global South.

His writings on development, tax, and foreign affairs have appeared in Foreign Policy, The Africa Report, Thomson Reuters Foundation, and EURACTIV.