Sen. Bernie Sanders, I-Vt., was one of 33 U.S. lawmakers who signed a letter calling for public disclosure of large companies' tax data. The letter was published Monday by the Organization for Economic Cooperation and Development. (AP)
The OECD published the lawmakers' remarks, as well as comments from many other interest groups, as part of a process to evaluate the OECD's guidance on how companies should report where they pay tax.
The OECD also said Monday that a public consultation due to take place March 17 on transparency rules had been canceled because of the new coronavirus, COVID-19.
The U.S. lawmakers cited data from the Internal Revenue Service that said American corporations booked $32 billion in profits in Bermuda in 2017, even though they had only 547 employees on the island.
"Public country-by-country reports would show which corporations are booking profits in tax havens, and better inform future policy changes regarding international corporate taxation," they wrote.
They said that investors face increased risks when they don't see full information about a company's tax plans. Moreover, they said that globally, policymakers, investors and citizens would benefit from increased transparency from multinational companies.
In addition to Sens. Sanders, Warren and Klobuchar, the letter was signed by Sen. Cory Booker, D-N.J., who had launched a presidential campaign before withdrawing from the race.
The lawmakers also advocated for companies to use a model called the Global Reporting Initiative as a standard for disclosing tax information.
"The GRI standard requires multinational corporations to report their operations in each country on a consolidated basis, rather than an aggregated basis, which presents a more accurate picture of corporate activity in each country," the lawmakers wrote.
They said that when companies have multiple subsidiaries in a country that have transactions with one another, aggregated reports can present "an exaggerated picture of the level of business activity in that country."
They also urged the OECD to consider setting tax disclosure rules for companies that fall below the current €750 million ($860 million) annual turnover threshold.
"A more complete picture of multinational corporate finances would improve tax administration and enforcement, especially with regard to developing countries with fewer very large corporations," they said.
In 2010, Congress enacted country-by-country reporting requirements for oil, gas and mining companies as part of an anti-corruption movement, but those rules have never gone into effect. In 2015, the OECD released new recommended country-by-country reporting rules as part of its base erosion and profit shifting project. Most governments have adopted those requirements, but the OECD standards call on tax authorities to keep the information private.
Public tax reporting has become a hot issue as pressure grows on companies to be more open about where they pay their taxes. The Anglo-Dutch oil company Shell published its tax data late last year in a move that may become more common as companies respond to public criticism of their tax practices.
But there is no consensus globally on whether companies should be compelled to publish their tax data. European Union countries are deadlocked on the issue, and a group of economists said last week that an EU law requiring tax transparency would be unwise as it would put European companies at a competitive disadvantage.
The OECD has also said repeatedly that it believes tax data is better used among tax authorities, rather than being made publicly available where the information can be easily misinterpreted.
--Additional reporting by Alex M. Parker and Natalie Olivo. Editing by Robert Rudinger.
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