New Rules Target the Gaming of the Tax Code
WASHINGTON, DC —The U.S. Department of Treasury released new rules today to require multinational companies to report profits and taxes paid on a country-by-country basis. This is the first time that this information is being gathered in the United States and shared with other nations. The information will be filed with the IRS and shared with states’ and other countries’ tax authorities with which the U.S. has agreements to exchange tax information.
Gary Kalman, Executive Director of the FACT Coalition issued the following statement:
“It is about to become a little harder for multinational companies to game the tax system. Filing taxes for these large and complex companies has become a little like a child playing both parents off of one another only, in this instance, the parents never talk to one another. The countries’ tax authorities don’t compare notes to see if the information all adds up.
Some companies use transfer pricing and other manipulations of their revenues to artificially move money around the globe to legally avoid or, in some cases, illegally evade paying taxes.
The new rules are a critical first step in our nation’s ability to catch up with the aggressive tax-dodging schemes of multinational corporations.
Unfortunately, the rule does not make this information public. Looking forward, the Securities and Exchange Commission could at least fix that for publicly traded companies and has started to ask important questions on this topic.
But the new rules are an important beginning. In a global economy, it is impossible to have a fair and honest tax system without knowing the most basic information about where profits are made and taxes are paid.
The Treasury Department has put forth important and commonsense rules to begin to address the easy gaming of the tax code.”
The Financial Accountability and Corporate Transparency (FACT) Coalition is a non-partisan coalition of more than 100 state, national and international organizations working toward a fair and honest tax system that addresses the challenges of a global economy and promotes policies to combat the harmful impacts of corrupt financial practices.
Notes to Editors:
- Read the HTML version of this release.
- Read the provisional rule (final will be posted tomorrow)
- Read FACT’s written comments on the proposed rule, submitted in March 2016.