Country by Country reporting
The Tax Justice Network and the Publish What You Pay coalition are leading an international campaign for Country-by-Country (CbC) reporting by multinational corporations (MNCs).The principles are straightforward.
Nearly two thirds of global trade takes place inside MNCs. By shifting profits between subsidiaries in different jurisdictions, they can dump their costs into high-tax jurisdictions, to be deducted against tax, and shift their profits to tax havens, where they pay little or no tax (we explore this more fully on our transfer pricing page, here). These artificial constructions are invisible in their annual reports, however: under current international accounting rules MNCs are allowed to sweep all their results - profits, tax payments, borrowings, and so on - into a single figure or set of regional figures. So you might get a set of results for "Africa" or "Europe" but it is impossible to unpick these numbers to work out what has happened in each country.
Country-by-country reporting would make MNCs break down their results for each country. It would not be unduly onerous - companies typically do this for internal purposes anyway - the World Bank, for instance, agrees that the benefits would outweigh the costs, and strongly supports the initiative overall. Because most countries use International Accounting Standards, this would be an extremely cost-effective route to creating a large step change in global corporate transparency for the benefit of citizens, tax authorities, investors, economists, and many others.
Country by country (CbC) reporting would provide benefits well beyond the arena of tax. Currently, citizens cannot use corporate published accounts to establish even whether an MNC operates in their jurisdictions, let alone what it is doing there. As multinationals grow more complex, the problem is getting worse.
See ten reasons why we want country-by-country reporting, here.
Country by country reporting would involve MNCs disclosing in their annual financial statements:
- The name of each country where it operates
- The names of all its companies in each country
- Its financial performance in each country (sales, purchases, labour costs, employee numbers, financing costs, pre-tax profits, tax charges, costs and value of assets.)
For more details on this, see here.
News and updates on country by country (CbC) reporting
March 27, 2013 - No More Shifty Business: a response to the OECD's BEPS report on global tax. TJN and other groups expand the scope of calls for country-by-country reporting, to include the notion of Combined Reporting (see Transfer Pricing Page for details of that.) Original document here.
Nov 1, 2012 - At last, the accountancy profession starts to take country by country reporting seriously
June 1, 2012 - Country by Country reporting: Accounting for globalisation locally. New report by Tax Research.
MY 2, 2012 - Richard Murphy speech on why we need CbC reporting
Nov 21, 2011 - Exposing the lost billions: How financial transparency by multinationals on a country by country basis can aid development - Eurodad. Full report here.
Sept 2011 - EU asks IASB to change its approach
Aug 4, 2011 - Nine French Regional Councils Ask For Country-By-Country Reporting From Financial Partners
July 19, 2011 - Christian Aid welcomes UK government support for CbC reporting
July 1, 2011 - Netherlands supports CbC
June 16, 2011 - 15,000 Norway signatures on tax havens, CbC
May 17, 2011 - Natural resource transparency: call for urgent EU action - Publish What You Pay
May 2, 2011 - US companies already have all the data they need for CbC reporting
March 16, 2011 - TIEAs a step closer in Norway
March 16, 2011 - Partial victory: European ministers support country-by-country reporting - Eurodad
March 4, 2011 - EU going for Dodd-Frank plus?
Feb 3, 2011 - Private companies say "financial transparency: not a great idea" - Eurodad
Dec 16, 2010 - TJN submission to the European Union on CbC reporting
Nov 2010 - Shifting sands: tax, transparency and multinational companies - Christian Aid
July 30, 2010 - World Bank submission to the International Accounting Standards Board (IASB.)
May 2010 - Accountancy briefing: the benefits of country-by-country reporting
May 2010 - Accountancy briefing - who are the users of accounts?
June 2009 - detailed report on CbC reporting for the Task Force on Financial Integrity and Economic Development