Responding to the passage of the Disclosure of Tax Havens and Offshoring Act in the US House of Representatives, Alex Cobham, chief executive of the Tax Justice Network said:
“We welcome the passage of this historic act1 on corporate tax transparency. We know from anonymised, aggregate country by country reporting data2 that the world loses hundreds of billions of dollars every year to corporate tax abuse. But lack of transparency on that data has meant we don’t know which multinational corporations are using which tax havens to underpay tax, and which countries suffer the resulting revenue losses. By making that data public, this act clears the fog of secrecy that corporate tax abusers have hid behind for so long.
“This achievement could not have been possible without the tireless work of the FACT Coalition, with whom we are proud to partner. The support of investors with trillions of dollars of assets under management has also been important, recognising that corporate tax abuse is a threat to shareholders as well as the wider public. We look forward to continuing progress of this legislation in the Senate.
“The pressure is now on the EU to match the ambition shown in the House yesterday. The EU trilogue agreement that was reached earlier this month3 on country by country reporting broke the taboo over requiring any publication of this data from large multinational corporations. But a craven response to lobbying by the multinationals and their tax advisers means that most of the profit shifting out of the EU would still remain hidden. The EU should renegotiate immediately and match the Disclosure of Tax Havens and Offshoring Act global coverage by requiring multinational corporations to report country by country data for all countries they have a presence in, not the just EU countries.
“Requiring this basic public information from multinationals should not be the preserve of the richest countries only. The data show that lower-income countries lose a higher share of their tax revenues to this type of corporate tax abuse, so public country by country reporting should be a basic requirement for multinationals that seek to profit from access to markets. For countries around the world to build back better from the pandemic, we must address the tax haven trapdoor beneath our feet. All countries must adopt robust public country by country reporting measures, the gold standard for which is the GRI’s country by country reporting standard4 which a growing number of multinational corporations are already voluntarily applying.”
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Read the FACT Coalition’s statement here.
Notes to editor
1. Click here to read the text of the Disclosure of Tax Havens and Offshoring Act.
2. The first international accounting standard for public country by country reporting was proposed by the Tax Justice Network in 2003, authored by Richard Murphy. Although initially resisted by the OECD the reporting method was eventually backed by the G20 group of countries in 2013, with the OECD producing a standard for use from 2015. After numerous delays, the OECD finally published partial data in July 2020. The Tax Justice Network analysed this data in its State of Tax Justice 2020 report to reveal for the first time how much each country in the world individually loses to cross-border corporate tax abuse. Click here to learn more about country by country reporting.
3. Click here to read our comment on the EU trilogue’s agreement on country by country reporting.
4. Click here for more information about the GRI’s country by country reporting standard.