Multinational corporations resist regulatory obligations to report taxes paid in each jurisdiction. Meanwhile, Australian regulators have postponed the country-by-country reporting (CbCR) requirement from July 2023 to July 2024. This regulation, part of the OECD's plan to mitigate tax base erosion and profit shifting, is a significant step forward for global tax transparency, says Ian Gary, Executive Director of the FACT Coalition.
Support for tax transparency is growing among multinational corporations, evidenced by recent shareholder votes at companies like Amazon, Chevron, and Exxon. However, the National Taxpayers Union opposes the proposal, asserting that it's driven by activists with ulterior motives and would indirectly tax investors, workers, and consumers.
Gary advocates for the Congressional endorsement of country-by-country reporting. He argues that it not only supports investors and equitable markets but also curbs the profit-shifting strategies of large multinational companies that disadvantage smaller businesses and deprive federal revenues.
The FACT Coalition recommends that the Securities and Exchange Commission and the Financial Accounting Standards Board require multinational corporations to provide country-by-country tax reports in their financial statements. These would detail profits, employees, tangible assets, and taxes paid.
Shareholder resolutions in the US are prompting corporations to report their tax strategies voluntarily. The European Union, despite resistance from multinational companies, is making progress in requiring country-by-country reporting, with new rules expected to take effect in the coming years. Eva Joly, a former member of the European Parliament, highlighted the challenges in implementing these rules due to opposition from tax havens within the Council of Europe. However, by using accounting rules, which only need a majority, the legislation was passed in December 2021.
Under these rules, multinational companies headquartered in Europe with a total turnover exceeding 750 million euros for two consecutive years must disclose this information. This also applies to subsidiaries of non-European multinationals that meet the same threshold. These rules will be enacted after 2024, with additional information to be released by 2026.
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