![]() These events represent a clear global momentum to see country-by-country reporting realized in the near term. House of Representatives passed the Disclosure of Tax Havens and Offshoring Act, included as Title V of the Corporate Governance Improvement and Investor Protection Act. ![]() In 2021 alone, the Global Reporting Initiative, implemented on a voluntary basis the first globally applicable country-by-country reporting standards, the European Union finalized a political deal to require a degree of public country-by-country reporting, and the U.S. There is a strong international push to require disaggregation of country-by-country tax reporting information, and we believe FASB should be leading this push. ![]() Nonetheless, the very stakeholders to whom FASB is responsible-the investors penning this letter-are currently left in the dark. While the disclosures to tax authorities may differ from compliance with GAAP, the raw data has already been compiled, which means GAAP-compliant disclosures would not comprise a significant new expense. Anticipated federal reform of the global intangible low taxed-income (GILTI) tax, and international tax reform at the OECD level, may also result in a global minimum tax regime that applies on a jurisdiction-by-jurisdiction basis, only increasing the relevance of related information to investors. Pursuant to an OECD agreement, tax authorities already have the information being requested by this letter. This information ultimately materially affects returns-taxes often might account for more than 30 percent of pre-tax profit, after all. Country-by-country tax financial reporting could have alerted investors to an overreliance on tax planning and other accounting measures that increased risk. tax assessment, which may implicate $12 billion in additional taxes owed through 2020, when the Tax Court upheld the IRS’s rejection of Coca-Cola’s problematic transfer-pricing practices. Investors require income and tax information at the country-by-country level to better understand a company’s financial, reputational, and economic risks to make informed investment decisions.Ĭurrently, companies have access to revenue, profit, tax, and other information on a country-by-country level that investors do not have, putting our funds at risk. This information is decision-critical for investors as we gauge risks, assess value, and ultimately, allocate capital. We suggest the Board require the information set forth on Exhibit A to this letter as necessary components of disclosure in defining the scope of urgently reproposing Accounting Standards Update to Income Taxes (740). ![]() The following letter responds to questions 1, 2, 5, and 6 of the Board’s invitation to comment.Īs investors, we urge FASB to prioritize the disaggregation of country-by-country income tax reporting information in notes to the financial statements. ![]() Our signatories together represent investments totaling over $2.9 trillion, and are comprised of asset managers, public pension funds, labor funds, individual investors, international investors, foundations and religious investors. We appreciate the opportunity to offer these comments on the Financial Accounting Standards Board’s (FASB’s) future standard-setting agenda (File Reference No. 2021-004: Prioritize Disaggregation of Jurisdiction-by-Jurisdiction Tax Reportingĭear Chair Jones, Director Salo, and Members of the Board, ![]()
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