Almost 90 global investors with more than US$2.3 trillion in collective assets have co-filed a petition calling on the Securities and Exchange Commission (SEC) to ensure greater tax transparency from US-listed companies. The petition recommends that such companies be required to publish basic tax and other financial information for each country in which they operate – this is formally known as country-by-country reporting (CbCR). CbCR has been introduced in other jurisdictions, such as the EU. “When multinational companies gamble on risky tax-planning strategies, it’s their investors who ultimately pay the price,” said Ian Gary, Executive Director of the FACT Coalition, which coordinated the filing. Signatories pointed to the reputational and legal risks surrounding ongoing high-profile transfer pricing cases against some of the country’s most powerful companies – Apple, Microsoft and Coca Cola – and how this has spurred a wave of direct, company-level advocacy from investors. “The SEC must act to give investors the information they need to determine whether these companies are building sustainable, long-term earnings based on genuine competitive advantage, or prioritising short-term profits through aggressive tax avoidance,” said Gary. There have been other investor-led efforts to improve multinational tax transparency, including new accounting rules which were completed last year by the US Financial Accounting Standards Board (FASB). “As headquarters to the most major multinational corporations, and as a market for thousands more, the US has an opportunity to lead a sea change in global tax transparency,” said FACT Policy Director Zorka Milin. Signatories of the petition include the Office of the New York City Comptroller, Boston Common Asset Management and the Local Authority Pension Fund Forum.
