A group of seven Senate Democrats and one independent has written a letter to the Financial Accounting Standards Board asking FASB to require multinational corporations to disclose their taxes, profits, and revenues on a country-by-country basis, echoing a recent letter from a group of House lawmakers.
The group who signed last week’s letter includes Sen. Al Franken, D-Minn., Elizabeth Warren, D-Mass., Bernie Sanders, I-Vt., Dick Durbin, D-Ill., Edward Markey, D-Mass., Jeff Merkley, D-Ore., Sheldon Whitehouse, D-R.I., and Chris Van Hollen, D-Md. The letter suggests changes in FASB’s disclosure framework relating to the disclosure requirements for income taxes.
“We believe that large companies should disclose, among other things, their income, assets, number of employees, and taxes paid on a country by country basis,” wrote the lawmakers. “Recent estimates show that U.S. companies currently hold more than $2.6 trillion offshore, with significant holdings in tax haven jurisdictions. Country by country disclosure is important for policymakers and the general public, as the information will be useful in examining economic trends and addressing public policy issues. For example, as Congress considers potential tax reform legislation, many Americans want to know how tax changes will affect large companies with significant assets held overseas. Further, investors want this information, as they could face significant changes in the value of their investments if changes in international tax enforcement practices or tax rules affect companies they have invested in.”
This Senate letter follows a similar letter to FASB in July from 16 members of the House.
A number of prominent investor groups and financial analysts, including the SEC Investor Advisory Committee, CFA Institute and the Interfaith Center on Corporate Responsibility have also asked FASB to make similar changes. FASB is already currently moving to expand corporate tax disclosures to move multinationals towards broader tax transparency. The Organization for Economic Cooperation and Development has also developed a set of country-by-country reporting requirements that the U.S. is participating in, and to which corporations are finding themselves subject. The IRS has created a section of its website devoted to country-by-country reporting guidance.