A group of advocacy organizations is urging the Financial Accounting Standards Board to require multinational companies to disclose more information about their taxes.
The groups, which include the AFL-CIO, Citizens for Tax Justice, the Economic Policy Institute, the FACT Coalition, Global Financial Integrity, and the Patriotic Millionaires, want FASB to require multinational companies to publicly disclose their revenues, profits and taxes on a country-by-country basis.
In June, the Treasury Department issued rules requiring large companies with $850 million or more in annual revenue to provide the Internal Revenue Service with financial data, including income and taxes paid, categorized by each country where they operate, reflecting rules from the Organization for Economic Cooperation and Development. Last week, a group of House Democrats, led by Rep. Mark Pocan, D-Wis., introduced legislation to require all companies to provide such information in their filings with the Securities and Exchange Commission (see Democrats Introduce Corporate Tax Transparency Bill in Congress).
The advocacy groups submitted a comment letter Friday to FASB in response to a FASB proposal for increasing the disclosure of foreign tax and income information by companies in their public filings. The groups said they welcomed FASB’s move toward requiring more disclosure, but want FASB to go much further. A FASB spokesperson declined to comment on the letter.
“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,” said the letter. “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.”
The groups argue that since companies must already provide such information to the IRS, so there is little extra cost to them.
“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,” said the letter. “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.”
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