July 18, 2017
Sixteen members of the House of Representatives sent a letter to the Financial Accounting Standards Board (FASB), urging them to require multinational companies to be more transparent in reporting where they pay taxes and book profits. Specifically, they called on the accounting body to require that companies disclose their taxes and profits on a country-by-country basis. The full letter can be downloaded here.
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Mr. Russell G. Golden Chair
Financial Accounting Standards Board 401 Merritt 7
PO Box 5116
Norwalk, CT 06856-5116
Dear Chair Golden:
Thank you for the opportunity to comment on the Financial Accounting Standards Board’s (FASB) proposed Accounting Standards Update related to the Disclosure Framework project on incomes taxes. We commend the Board’s efforts in undertaking this project and share its goal of improving the effectiveness and utility of financial statement disclosures. In order to fully realize these goals, we urge the Board to require multinational corporations to disclose meaningful country-by-country reporting information in their public financial statements.
Recent reports estimate U.S. companies hold over $2.6 trillion in offshore accounts, much of which is located in tax haven jurisdictions. Concerns around corporate profit shifting have prompted initiatives across the globe to combat tax avoidance, including the Organization for Economic Cooperation and Development’s base erosion and profit shifting project, efforts by the European Union to improve the tax regime across its member states, and others. While these policies target many broad issues pertaining to tax avoidance, a notable point of consistency is the need for heightened disclosure and transparency requirements; the Board’s Disclosure Framework project offers a valuable opportunity to make critical progress on these shared objectives.
These issues are particularly relevant to FASB’s objectives because the limited availability of public data about overseas holdings poses a threat to investors, policymakers, and the general public. Importantly, shareholders face heightened financial risks when they lack access to complete information about a company’s tax strategy, valuation, and management approach. A number of large U.S. companies have faced significant questions in recent years over the potential value of their tax liabilities, uncertainty which potentially threatens their investors. Moreover, policymakers require this information to make informed decisions on matters pertaining to taxation, the economy, and other critical areas impacting the American people.
In order to address the threat posed by offshore profit shifting to investors and the public, we urge the Board to require multinational corporations to disclose their income, assets, number of employees, and taxes paid on an annual, country-by-country basis. These standards will implement critical safeguards and mitigate risk for investors and provide policymakers and the public with important data relevant to our national well-being. Companies already use this information internally and report much of it to the IRS, mitigating any alleged compliance burdens associated with such a directive.
We applaud the Board’s goal of strengthening disclosure and efficiency in corporate financial statements. The inclusion of public country-by-country tax reporting in the final recommendation would represent significant progress toward achieving this goal, and we urge you to adopt these important reforms.
Sincerely,
Mark Pocan
Member of Congress
Lloyd Doggett
Member of Congress
Sandy Levin
Member of Congress
Earl Blumenauer
Member of Congress
Judy Chu
Member of Congress
Michael E. Capuano
Member of Congress
David N. Cicilline
Member of Congress
John Conyers
Member of Congress
Peter A. DeFazio
Member of Congress
Keith Ellison
Member of Congress
Barbara Lee
Member of Congress
Ted Lieu
Member of Congress
Stephen Lynch
Member of Congress
Gwen S. Moore
Member of Congress
Jan Schakowsky
Member of Congress
Raul Grijalva
Member of Congress
About the FACT Coalition
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.
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