Financial Accounting News

House Bill Could Force Detailed Tax Reports From Multinationals

Feb. 20, 2020, 11:04 PM

Large multinational companies would have to disclose country-by-country details of profits, taxes, employees, and tangible assets of their overseas operations under a bill introduced by Rep. Cindy Axne on Thursday.

The Disclosure of Tax Havens and Offshoring Act directs the Securities and Exchange Commission to mandate companies with annual revenues of more than $850 million to file detailed reports with the market regulator. Democratic Representatives Lloyd Doggett (Texas), Stephen Lynch (Mass.), and Jennifer Wexton (Va.) also sponsored the measure.

The House bill comes on the heels of increased pressure from tax fairness advocates that argue large companies should report where and how much they pay in taxes.

The Organization for Economic Cooperation and Development already has a global framework in place for multinationals to report country-by-country tax data to governments, but it doesn’t require them to be publicly available.

“The disclosure would show which corporations are employing a pattern of tax avoidance, and would give investors valuable information about the risks public companies are taking,” Axne, a Democrat representing Iowa, said in a statement.

The Senate version of the bill, S. 1609, was introduced in May by Democratic Senators Chris Van Hollen (Md.), Tammy Duckworth, (Ill.), Sheldon Whitehouse (R.I.), Tina Smith (Minn.), and Amy Klobuchar (Minn.)

Separately, the Financial Accounting Standards Board is considering whether to make companies reveal more details about their income taxes in their financial statement disclosures, but the rulemaker’s latest proposal doesn’t require country-by-country breakdowns.

To contact the reporter on this story: Nicola M. White in Washington at nwhite@bloombergtax.com

To contact the editors responsible for this story: Jeff Harrington at jharrington@bloombergtax.com; Sony Kassam at skassam1@bloombergtax.com

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