Andrew Goodall has been writing about tax for some time, and has seen the inside out of many of the debates I have been involved in over the years. I was therefore pleased to find him note on his own blog over the weekend:
During the last two weeks I’ve listened to almost 12 hours of discussion and debate on tax and transparency, where the focus has been on the impact of tax avoidance on developing countries. I’ve reported very briefly for Tax Journal news on the CommonsInternational Development Committee (IDC) hearing of 24 April and International Tax Review’s excellent Tax and Transparency Forum, held on 2 May.
And I’ve read ActionAid’s report Calling time: Why SABMiller should stop dodging taxes in Africa. It is essential reading for anyone with an interest in tax or development or both – in theory at least, this means everybody. Certainly, if you have any doubt that there is a clear link between tax avoidance and poverty in developing countries, you should read it.
All of this has been enough to convince me that country by country reporting of profits and taxes paid – an idea developed by Richard Murphy and supported by many NGOs – should be written into international accounting standards.
Andrew provides extensive reasoning on this blog, but perhaps the best reason is this one, which he notes:
A Financial Times editorial noted a while ago that country by country reporting might expose what it called ‘the scandalous tax treatment of multinationals in the rich world’. The editorial published on 22 December 2010 said:
‘Current practice turns corporate tax largely into a voluntary gesture by the well-run multinational, whose methods of choice for locating income in lower-taxed jurisdictions are intragroup financial links and transfer pricing of intangibles such as intellectual property. As finance and intangibles grow in importance, so will the slipperiness of the corporate tax base.’
Quite so. And it will be at cost to the ordinary people of this world. That’s why we need country-by-country reporting.