One in nine US multinationals fail to comply with tax transparency law

PRESS OFFICE

One in nine US multinationals fail to comply with tax transparency law

Analysis of more than 600 US multinational corporations has revealed that 12 per cent failed to comply with UK law requiring them to publish their tax strategies. With the UK estimated to lose £25 billion in corporate tax revenue each year due to multinational corporations shifting profits out of the country1, campaigners are calling on the UK government to enforce the law fairly and to also make use of a more rigorous transparency legal power that the government acquired in 2016 but has so far shied away from exercising.

The Tax Justice Network has identified 71 US multinationals operating in the UK and handling hundreds of millions of pounds each year for which public tax disclosures could not be found. These companies included Hewlett Packard Enterprise, Wayfair, UPS, Clorox and Delta Airlines2. Altogether, the 71 noncompliant US multinationals had a UK revenue of over £10.4 billion in 2017.

Among the US multinationals that did comply with the law, the average length of all published tax disclosures was 621 words – just a little over a third the length of a Nando’s menu.

The study also found that the tax disclosures published by the US multinationals on average were at least 30 per cent identical to tax disclosures published by other multinationals. The tax disclosures published by NIKE Inc and Alphabet Inc, Google’s parent company, were 86 per cent identical. Despite the major differences between the two companies and their industries, the only significant differences in their tax disclosures were the names of the companies and their subsidiaries. Other well-known brands with a high similarity rate included Gap Inc (85 per cent), Harley-Davidson Inc (80 per cent) and Goodyear Tire and Rubber Co (71 per cent).3

The Finance Act 2016 requires all UK based companies that have either £2 billion in total assets or £200 million in revenue to publicly disclose their tax strategies. This duty also applies to UK companies that are part of a multinational group with a global revenue of €750 million. The reports’ findings suggest that given the opportunity to self-report on their tax strategies, more than a third of US multinationals either ignored their legal responsibility or published brief declarations that were possibly copied from other companies’ tax disclosures or generically written by a hired accounting firm.

The Finance Act 2016 also gives the UK government the power to require US multinationals to publish data on their profits and other economic activity broken down for each country they operate in – an approach developed by the Tax Justice Network and subsequently adopted by the OECD, known as country by country reporting. The UK government has yet to exercise the power despite research saying county by country reporting can prevent an estimated £2.5 billion in tax from being dodged in the UK each year.4

Alex Cobham, chief executive at the Tax Justice Network, said:

“Let this be the end of the big four accounting firms’ stories about the ‘responsible tax behaviour’ of their clients. Given the opportunity to be open and honest with the public about their tax strategies, one in nine US multinationals chose to ignore the law while at least as many published copy and pasted declarations.”

“The UK government can no longer sit on its hands while it has the legal power to prevent multinationals from shifting profit out of the country to the tune of £25 billion in lost corporate tax each year. Research shows that requiring companies to publish a country by country breakdown of their activity, profits and taxes helps prevent profit shifting – but US multinationals’ tax disclosures have shown that many of them won’t come clean on their own, and the UK government seems to have done nothing to enforce its own laws.”

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Update: We are pleased to see that several US multinational corporations have uploaded their tax disclosures following our research. These tax disclosures should have been published no later than September 2018 and even earlier for some companies, depending on their financial reporting year. Our analysis was carried out more than three months after that timeframe, giving a long window for compliance. Even so, the corporations now coming forward with tax disclosures appear to have uploaded their disclosures after our analysis was conducted – so while we welcome their disclosures, there seems no doubt that they were in violation of UK law for a substantial period. The following is a list of tax disclosures that have been either brought to our attention or found by our researchers after our report published.

  • Wayfair Inc‘s tax disclosure can be found here. Wayfair Inc’s tax disclosure should have been published by 31 December 2017, as it is required by the Finance Act 2016 to disclose its tax strategies for fiscal years beginning after 15 September 2016 – not by the due date of Wayfair’s 2017 tax return, which would have been 31 December 2018. Wayfair’s tax disclosure was first indexed by Google on 12 January 2019. The earliest record of the tax disclosure on the archive.org is 8 February 2019.
  • Hewlett Packard Enterprise have emailed us a hard copy of their tax disclosure. The corporation’s tax disclosure should have been published on 31 October 2017. They did not provide a URL to the disclosure and we have yet to find the disclosure on their website.
  • Dentsply Sirona Inc‘s tax disclosure can be found here. Dentsply Sirona Inc’s tax disclosure should have been published by 31 December 2017. There is no date on the disclosure. As of writing, there is no record of it on archive.org and no listed date when checking when it was indexed in Google.
  • Heico Corp‘s tax disclosure can be found on its subsidiary’s website here. Heico Corp’s tax disclosure should have been published by 31 December 2017. Heico Corp’s tax disclosure was first indexed by Google on 31 December 2018. The earliest record of the tax disclosure on archive.org is 2 February 2019.
  • Monster Energy emailed us a link to their tax disclosure, which is available here. We could not find direct links to the tax disclosure from the primary Monster Energy website (https://www.monsterbevcorp.com) nor the European website (https://www.monsterenergy.com). The tax disclosure should have been published by 31 December 2017. The tax disclosure does not come up via a Google search and does not seem to be indexed on Google. The earliest record of the tax disclosure on archive.org is 9 August 2018.

Download the full report

Contact: Mark Bou Mansour, communications coordinator, email: [email protected] mobile: 07562 403078

Note to Editor

  1. Katarazyna Bilicka, 2018, ‘Comparing UK tax returns of foreign multinationals to matched domestic firms’, under consideration at American Economic Review: https://katarzynabilicka.weebly.com/uploads/1/0/3/5/103570280/datalab_profit_shifitng_21052018.pdf
  2. Full list of companies for which the Tax Justice Network could not find public tax disclosures:
    Company Name Ticker Link to Companies House Filings
    HOME DEPOT INC HD https://beta.companieshouse.gov.uk/company/02961334/filing-history
    UNITED PARCEL SERVICE INC UPS https://beta.companieshouse.gov.uk/company/01933173/filing-history
    HEWLETT PACKARD ENTERPRISE HPE https://beta.companieshouse.gov.uk/company/00690597/filing-history
    DELTA AIR LINES INC DAL https://beta.companieshouse.gov.uk/company/FC005586/filing-history
    ALLSTATE CORP ALL https://beta.companieshouse.gov.uk/company/07165194/filing-history
    INTL FCSTONE INC INTL https://beta.companieshouse.gov.uk/company/05616586/filing-history
    AUTOMATIC DATA PROCESSING ADP https://beta.companieshouse.gov.uk/company/00949665/filing-history
    FIDELITY NATIONAL INFORMATION SERVICES FIS https://beta.companieshouse.gov.uk/company/03517639/filing-history
    BORGWARNER INC BWA https://beta.companieshouse.gov.uk/company/02346109/filing-history
    MOHAWK INDUSTRIES INC MHK https://beta.companieshouse.gov.uk/company/04404208/filing-history
    CROWN HOLDINGS INC CCK https://beta.companieshouse.gov.uk/company/03182537/filing-history
    UNIVAR INC UNVR https://beta.companieshouse.gov.uk/company/00139876/filing-history
    ZIMMER BIOMET HOLDINGS INC ZBH https://beta.companieshouse.gov.uk/company/00740767/filing-history
    CONSTELLATION BRANDS STZ https://beta.companieshouse.gov.uk/company/03649497/filing-history
    NATIONAL OILWELL VARCO INC NOV https://beta.companieshouse.gov.uk/company/00873028/filing-history
    JONES LANG LASALLE INC JLL https://beta.companieshouse.gov.uk/company/01188567/filing-history
    BERRY GLOBAL GROUP INC BERY https://beta.companieshouse.gov.uk/company/01589762/filing-history
    EXPEDITORS INTERNATIONAL OF WASHINGTON INC EXPD https://beta.companieshouse.gov.uk/company/01872622/filing-history
    CLOROX CO CLX https://beta.companieshouse.gov.uk/company/06062933/filing-history
    AK STEEL HOLDING CORP AKS https://beta.companieshouse.gov.uk/company/00932617/filing-history
    RAYMOND JAMES FINANCIAL CORP RJF https://beta.companieshouse.gov.uk/company/03127076/filing-history
    CINTAS CORP CTAS https://beta.companieshouse.gov.uk/company/08069858/filing-history
    FASTENAL CO FAST https://beta.companieshouse.gov.uk/company/SC370971/filing-history
    DENTSPLY SIRONA INC XRAY https://beta.companieshouse.gov.uk/company/01480123/filing-history
    LSC COMMUNICATIONS INC LKSD https://beta.companieshouse.gov.uk/company/00166396/filing-history
    PLATFORM SPECIALTY PRODUCTS PAH https://beta.companieshouse.gov.uk/company/01290882/filing-history
    CHURCH & DWIGHT INC CHD https://beta.companieshouse.gov.uk/company/00375793/filing-history
    KLA-TENCOR CORP KLAC https://beta.companieshouse.gov.uk/company/01560324/filing-history
    COOPER-STANDARD HOLDINGS INC CPS https://beta.companieshouse.gov.uk/company/02329378/filing-history
    VENTAS INC VTR https://beta.companieshouse.gov.uk/company/09355855/filing-history
    WAYFAIR INC W https://beta.companieshouse.gov.uk/company/06776852/filing-history
    MERITOR INC MTOR https://beta.companieshouse.gov.uk/company/10208076/filing-history
    MONSTER BEVERAGE CORP MNST https://beta.companieshouse.gov.uk/company/06394100/filing-history
    A.O. SMITH CORP AOS https://beta.companieshouse.gov.uk/company/03453820/filing-history
    LINCOLN ELECTRIC HOLDINGS INC LECO https://beta.companieshouse.gov.uk/company/01994660/filing-history
    MPM HOLDINGS INC MPMQ https://beta.companieshouse.gov.uk/company/06376744/filing-history
    BIO-RAD LABORATORIES INC BIO https://beta.companieshouse.gov.uk/company/03044694/filing-history
    KENNAMETAL INC KMT https://beta.companieshouse.gov.uk/company/03425094/filing-history
    WOODWARD INC WWD https://beta.companieshouse.gov.uk/company/SF000753/filing-history
    GRIFFON CORP GFF https://beta.companieshouse.gov.uk/company/04290723/filing-history
    ATLAS AIR WORLDWIDE HOLDING INC AAWW https://beta.companieshouse.gov.uk/company/09406739/filing-history
    BRIGGS & STRATTON BGG https://beta.companieshouse.gov.uk/company/02030483/filing-history
    IDEXX LABS INC IDXX https://beta.companieshouse.gov.uk/company/02454226/filing-history
    GENTEX CORP GNTX https://beta.companieshouse.gov.uk/company/09069589/filing-history
    UNIFIRST CORP UNF https://beta.companieshouse.gov.uk/company/05103812/filing-history
    NEW YORK TIMES CO NYT https://beta.companieshouse.gov.uk/company/01106659/filing-history
    HERC HOLDINGS INC HRI https://beta.companieshouse.gov.uk/company/08696121/filing-history
    INTERACTIVE BROKERS GROUP IBKR https://beta.companieshouse.gov.uk/company/03958476/filing-history
    GENERAC HOLDINGS INC GNRC https://beta.companieshouse.gov.uk/company/07165283/filing-history
    SEI INVESTMENTS CO SEIC https://beta.companieshouse.gov.uk/company/03765319/filing-history
    INTEGER HOLDINGS CORP ITGR https://beta.companieshouse.gov.uk/company/05179062/filing-history
    HEICO CORP HEI https://beta.companieshouse.gov.uk/company/03897611/filing-history
    NETGEAR INC NTGR https://beta.companieshouse.gov.uk/company/06344745/filing-history
    FORTINET INC FTNT https://beta.companieshouse.gov.uk/company/04570027/filing-history
    TTEC HOLDINGS INC TTEC https://beta.companieshouse.gov.uk/company/03424866/filing-history
    CINCINNATI BELL INC CBB https://beta.companieshouse.gov.uk/company/06493410/filing-history
    NETSCOUT SYSTEMS INC NTCT https://beta.companieshouse.gov.uk/company/05150579/filing-history
    PTC INC PTC https://beta.companieshouse.gov.uk/company/02513030/filing-history
    CROCS INC CROX https://beta.companieshouse.gov.uk/company/06032591/filing-history
    EXTERRAN CORP EXTN https://beta.companieshouse.gov.uk/company/05128575/filing-history
    WEX INC WEX https://beta.companieshouse.gov.uk/company/08903805/filing-history
    W.P. CAREY INC WPC https://beta.companieshouse.gov.uk/company/04244798/filing-history
    IPG PHOTONICS CORP IPGP https://beta.companieshouse.gov.uk/company/04132272/filing-history
    INTERFACE INC TILE https://beta.companieshouse.gov.uk/company/00309779/filing-history
    COLONY CAPITAL INC CLNY https://beta.companieshouse.gov.uk/company/09120522/filing-history
    CHOICE HOTELS INTERNATIONAL INC CHH https://beta.companieshouse.gov.uk/company/01796064/filing-history
    K12 INC LRN https://beta.companieshouse.gov.uk/company/07754025/filing-history
    HAEMONETICS CORP HAE https://beta.companieshouse.gov.uk/company/01231087/filing-history
    PRESTIGE CONSUMER HEALTHCARE PBH https://beta.companieshouse.gov.uk/company/03944055/filing-history
    J2 GLOBAL INC JCOM https://beta.companieshouse.gov.uk/company/03721601/filing-history
    HOULIHAN LOKEY INC HLI https://beta.companieshouse.gov.uk/company/06330902/filing-history
  1. Top 15 companies by highest similarity in tax disclosures to other disclosures. Full table provided in the report.
    Company name Ticker Highest similarity Word count
    HERMAN MILLER INC MLHR 95 746
    CACI INTERNATIONAL INC CACI 94 433
    UGI CORP UGI 93 742
    BROADCOM INC AVGO 92 416
    QUANEX BUILDING PRODUCTS NX 92 564
    PROVIDENCE SERVICE CORP PRSC 91 808
    OWENS & MINOR INC OMI 90 588
    GREIF INC GEF 87 1020
    KAMAN CORP KAMN 86 540
    NIKE INC NKE 86 392
    ALPHABET INC GOOGL 85 411
    GAP INC GPS 85 350
    AMWAY Private 84 417
    INSIGHT ENTERPRISES INC NSIT 82 905
    HARLEY-DAVIDSON INC HOG 80 424
  1. Tax Justice Network and Tax Justice Network UK, ‘The Value of Public Country by Country Reporting’, October 2018. https://www.taxjustice.net/wp-content/uploads/2018/10/The-value-of-country-by-country-reporting-for-the-UK-Tax-Justice-Network.pdf