A broad alliance of United States organizations and coalitions submitted comments to the national Financial Accounting Standards Board (FASB) on Friday, September 30th —urging the body to require multinational companies to be more transparent about their tax practices. FASB, the private body which sets financial accounting and reporting standards in the United States, has suggested a number of changes to increase the disclosure of foreign tax and income information by companies in their public filings.
As Global Alliance for Tax Justice’s North American network member FACT (Financial Accountability and Corporate Transparency) stated, “While the groups welcomed FASB’s move toward requiring more disclosure, they pushed FASB to go much further and require companies to publicly disclose their revenues, profits, and taxes on a country-by-country basis.
The letter notes:
“The most comprehensive and cost effective way to provide the needed clarity on U.S. companies’ international operations would be to require them to publicly disclose the same country-by-country financial data that many companies will already be required to report to the Internal Revenue Service (IRS) as per recently issued rules by the Treasury Department. In other words, companies should be required to publicly disclose their revenue, profit before income tax, total income tax paid on a cash basis, total accrued income tax expense, total employees, book value of tangible assets, and additional important financial data already required by the IRS, on a country-by-country basis.
“While representatives of some companies have objected to the difficulty and cost of providing the relatively low level of disclosure in many of the proposals considered by FASB, requiring companies to publicly disclose the information they are already required to disclose to the IRS means that such disclosure would come at little to no additional cost. At the same time, making this information public will provide investors and the public with information necessary to make informed decisions about individual companies’ potential financial exposure due to their tax avoidance. In addition, this level of disclosure would provide lawmakers with a significantly greater amount of information from which to better, and perhaps more narrowly, tailor international tax reform proposals.”
The comments follow a flurry of recent, related activity on the topic of country-by-country reporting. Just last week, lawmakers introduced a bill which would require publicly-traded companies to disclose similar information publicly in their filings to the Securities and Exchange Commission. Earlier this month, a FACT Coalition report showcased how shareholders are increasingly at risk from the lack of disclosure of corporate tax practices. The topic was likewise highlighted in an op-ed on September 21st in The New York Times by former BlackRock, Inc. Managing Director Morris Pearl as well as at a September 20th event at the Center for American Progress Action Fund co-sponsored by a number of other organizations”.
The full letter, that can be found here, is signed by the American Federation of Labor and Congress of Industrial Organizations (AFL-CIO), Center of Concern, Citizens for Tax Justice, Coalition on Human Needs, Economic Policy Institute, European Network on Debt and Development (Eurodad), Fair Share, Financial Accountability & Corporate Transparency Coalition (FACT Coalition), Global Financial Integrity, Global Witness, Jubilee East Bay, Jubilee USA Network, Kairos Europe, Main Street Alliance, Methodist Tax Justice Network, NETWORK Lobby for Catholic Social Justice, New Rules for Global Finance, Oxfam America, Patriotic Millionaires, Public Citizen, Publish What You Pay US, Tax Justice Network, Tax Justice Network – Norway, Tax Justice Network – USA, Tax Research UK, U.S. Public Interest Research Group (PIRG), and Vienna Institute for International Dialogue and Cooperation (VIDC).