The Task Force on Financial Integrity and Economic Development (Task Force)* released a report today detailing a new system of accounting for multinational corporations (MNCs) designed to increase transparency and curtail tax evasion.
Termed “country-by-country reporting” the new protocol would require MNCs to disclose the full details of their commercial transactions by jurisdiction, instead of the current system which requires reporting along product of division lines. As much as 60 percent of global trade currently takes place within MNCs, which are not required to disclose many salient details of their trade practices under the existing regulatory framework.
“Tax evasion by multinational corporations is one of the greatest drivers of illicit capital flight out of the developing world,” said Global Financial Integrity director Raymond Baker. “County-by-country reporting is a low-cost, readily implementable way to ensure better business compliance with tax policy and fair business practices. The Task Force applauds the UK’s announcement earlier this week that it would push for country-by-country reporting at next week’s meeting of the Group of 20 in Berlin.”
Termed “country-by-country reporting” the new protocol would require MNCs to disclose the full details of their commercial transactions by jurisdiction, instead of the current system which requires reporting along product of division lines. As much as 60 percent of global trade currently takes place within MNCs, which are not required to disclose many salient details of their trade practices under the existing regulatory framework.
“Tax evasion by multinational corporations is one of the greatest drivers of illicit capital flight out of the developing world,” said Global Financial Integrity director Raymond Baker. “County-by-country reporting is a low-cost, readily implementable way to ensure better business compliance with tax policy and fair business practices. The Task Force applauds the UK’s announcement earlier this week that it would push for country-by-country reporting at next week’s meeting of the Group of 20 in Berlin.”
*Not all Task Force members agree with every aspect of each report published by the Task Force
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