FOR IMMEDIATE RELEASE:
November 17, 2023
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FACT, Allies Make the Case at UN for Enhanced Tax Transparency Measures to Meet Sustainable Development Goals

UN Panel Outlines the Need for Public Country-by-Country Reporting of Tax Data by Major Multinational Businesses

WASHINGTON, DC - On Friday, FACT executive director Ian Gary joined experts and allies from Oxfam America, Tax Justice Network Africa, the United Nations Development Programme (UNDP) and the Australian and Nigerian governments for a panel on global tax transparency as a part of the UNDP's Dialogue on Tax and SDGs in New York. The panel participants made clear connections between the revenue-raising promise of enhanced tax transparency measures and the realization of the UN's Sustainable Development Goals (SDGs), in particular through growing calls for the adoption of public country-by-country reporting (public CbCR) requirements for large multinationals.

"The global scourge of multinational profit shifting and tax avoidance costs governments around the world billions of dollars," said Gary. "The good news is that there is unstoppable momentum at this time toward public country-by-country reporting, and toward abandoning the system that keeps tax administrators, investors, and others in the dark."

Evidence shows that CbCR can curtail corporate tax avoidance and increase effective tax rates, provided that it is public. However, the existing CbCR regime under the Organization for Economic Cooperation and Development (OECD) is confidentially filed and exchanged among governments, and includes very few developing countries. Public CbCR could help close this information gap by empowering developing nations' tax authorities to better spot potential cases of tax evasion by major multinationals operating within their borders, allowing them to more efficiently leverage limited tax enforcement resources and collect critical additional revenue required to achieve the SDGs.

There are 49 African countries that are currently unable to benefit from country-by-country reports under existing OECD processes, said Chenai Mukumba, executive director of Tax Justice Network Africa. "By and large, putting in place public country-by-country reporting provides the tax transparency that's required for many tax administrations to ensure that multinational companies are providing the revenue that authorities need in order to enforce existing tax rules, raise revenue, as well as craft tax reforms."

That sentiment was echoed by Taiwo Oyedele, Chairman of the Nigerian Presidential Committee on Fiscal Policy and Tax Reforms. On public CbCR, "Nigeria has not taken a position as of yet," said Oyedele, "but...the more information we have, the better for everyone. If you do not have anything to hide, then why hide in the first place?"

Major jurisdictions are already advancing public CbCR. In recorded remarks made during the panel, Australian Assistant Minister for Treasury Andrew Leigh provided updates on the Australian government's commitment to implement public CbCR, saying that "Our aim is to be world leading in country-by-country reporting... It's about encouraging a race to the top in business productivity, not a race to the bottom in tax compliance." Leigh also reiterated that the government intends to begin reporting under its proposed standard for income years beginning on or after July 1, 2024.

While Australia's public country-by-country reporting regime - first introduced as draft legislation in March - was expected to pass through Parliament this year, the measure was delayed and subjected to minor revisions following pushback from some business interests. In his remarks, Leigh acknowledged that the government is still "considering feedback on compliance costs and alignment with other international standards." In its current form, however, the Australian proposal constitutes by far the most complete and effective public CbCR regime contemplated by any major jurisdiction.

During the panel, Oxfam America's Daniel Mule also drew attention to mounting investor interest in public CbCR, represented by a growing number of shareholder resolutions demanding increased tax transparency from Amazon, Microsoft, ExxonMobil, and other major U.S.-based multinationals introduced in recent years. "Both companies themselves and, particularly, investors, are increasingly recognizing that a company's tax practices are financially material, said Mule. "Because of the utility of this information, because it has an impact on investors' bottom lines, investors are now using their power as shareholders to call for tax transparency."

While international action on tax transparency is heartening, full U.S. buy-in on public CbCR would help to establish a consistent, comprehensive international standard. Though a piecemeal form of tax transparency was recently approved by the independent Financial Accounting Standards Board (FASB), FACT has long called on the U.S. Securities and Exchange Commission (SEC) to exercise its existing authority to introduce true public CbCR requirements for large U.S.-listed multinationals.

"Today's panel makes the case for greater tax transparency crystal clear," said Gary in a statement. "With investors still left in the dark about serious risks, and with international governments struggling to raise much-needed funds to fulfill the SDGs and address the climate crises, where companies pay - and don't pay - taxes is no longer a private affair. It's time for the SEC to get to work and deliver real transparency through public country-by-country reporting."

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Notes to the Editor:

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Click here to watch a recording of Friday's panel, as well as panel discussion, keynote speeches, and other events from the week. The UNDP Dialogue on Tax and SDGs 2023 is co hosted by UNDP, Columbia University, and the governments of Norway and Finland.

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Recent developments in multinational tax transparency, including in the U.S., EU, and Australia, are covered in more detail in FACT's latest policy brief.

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A recent blog by FACT policy director Zorka Milin details the ongoing transfer pricing dispute between the Internal Revenue Service and U.S. multinational tech giant Microsoft, which could lead to tens of billions of dollars in additional tax liability, interest and fines, to the detriment of Microsoft's global investors.

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Read FACT's recent report, "A Material Concern: The Investor Case for Public Country-by-Country Tax Reporting," here.

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Read a recent FACT Sheet on the need for SEC action on public CbCR here.

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About the FACT Coalition

The Financial Accountability and Corporate Transparency (FACT) Coalition is a non-partisan alliance 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 promoting policies to combat the harmful impacts of corrupt financial practices.

For more information, visit www.thefactcoalition.org.

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