U.S. Should Follow E.U. Transparency Lead, Require Country-by-Country Reporting at Banks
February 28th, 2013
GFI Praises European Union for Committing to Require Financial Institutions to Disclose Profits, Taxes, Subsidies, and Staff Numbers on a Country-by-Country Basis
Civil Society Calls on E.U. and U.S. to Expand Transparency Rules beyond Financial Institutions to All Sectors
WASHINGTON, DC – Global Financial Integrity (GFI) praised European Union leaders today for their commitment to requiring banks to disclose profits-made, taxes-paid, subsidiaries, and staff levels on a country-by-country basis, and the Washington, DC-based research and advocacy organization called upon the United States to follow Europe’s lead and adopt similar rules.
“This is a major victory for taxpayers in Europe as well as for citizens in the developing world,” said GFI Director Raymond Baker. “Disclosing this information will make it much more difficult for financial institutions to artificially shift their profits to low and no tax countries and dodge taxes, at a time when rich and poor nations alike are struggling to collect enough revenue.”
“This kind of country-by-country reporting will provide invaluable information to shareholders as they weigh the risks of investing in particular companies, and it will provide crucial data to government agencies, civil society, and the media as they investigate and crack-down on abusive tax avoidance and evasion,” added Heather Lowe, GFI’s Legal Counsel and Director of Government Affairs. “It’s now time for the United States to step-up and require U.S. companies to disclose the same type of information.”
While GFI praised today’s move, it urged European and American policymakers to expand the initiative beyond the financial industry to require country-by-country reporting of revenues, profits, taxes paid and number of employees for multinational corporations operating in all sectors.
Section 1504 of the Dodd-Frank Wall Street Reform Act of 2010 already requires country-by-country reporting of payments to governments for all companies operating in the oil, gas, and mining sectors that report to the U.S. Securities and Exchange Commission.
“Transparency in the extractive industries and in the banking sector is vitally important,” said Mr. Baker. “However, corruption and abusive tax dodging are not unique to banks and oil companies. Indeed, our research shows that the developing world loses roughly $1 trillion per year to crime, corruption, and tax evasion. The Greek economy hemorrhaged $216 billion in illicit outflows from 2003-2009 in the lead-up to the debt crisis. This is a systemic problem caused largely by the opaque, secretive global financial system. It’s essential that world leaders expand upon these transparency rules and apply them to multinational corporations operating in every industry.”
Section 111 of the Cut Unjustified Tax Loopholes Act (S. 268, CUT Loopholes Act), introduced by U.S. Senators Carl Levin (D-MI) and Sheldon Whitehouse (D-RI) earlier this month, would require all multinational companies to disclose their employees, revenues, and tax payments on a country-by-country basis.
“The CUT Loopholes Act would be a tremendous step forward,” added Ms. Lowe. “It’s the logical next move for U.S. policymakers. The U.S. Senate should make it a priority.”
Final Approval
The transparency rules proposed today by the European Union still require formal approval by the European Council, European Parliament, and European Commission. Nevertheless, they were agreed to informally by negotiators from the Council, Parliament, and Commission, making it very likely that they will be formally adopted within the coming months.
To schedule an interview with Mr. Baker, Ms. Lowe or other GFI spokespersons, contact Clark Gascoigne at +1 202 293 0740, ext. 222 / cgascoigne@gfintegrity.org. On-camera spokespersons are available in Washington, DC.
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Notes to Editors:
- Click here to read the press release from the European Union announcing the country-by-country reporting requirements.
- Click here for more information on how country-by-country reporting can help curtail illicit financial flows.
- Click here for more information on Section 1504 of the Dodd-Frank Wall Street Reform Act of 2010.
- More information on the CUT Loopholes Act (S. 268) can be found here: [ Summary | Full Text ]
Contact:
Clark Gascoigne
cgascoigne@gfintegrity.org
+1 202-293-0740 ext.222
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Global Financial Integrity (GFI) is a Washington, DC-based research and advocacy organization which promotes transparency in the international financial system as a means to global development.
For additional information please visit www.gfintegrity.org.