This is the video of the presentation I made to the TAXE committee of the EU yesterday. Begin at about 1 hour ten minutes.
The slides are here.
My answers to questions start at about 1 hour 49 minutes.
Thanks for reading this post.
You can share this post on social media of your choice by clicking these icons:
You can subscribe to this blog's daily email here.
And if you would like to support this blog you can, here:
You say that markets are demanding CBC reporting?
I can’t say I’ve seen any evidence of that. Ever. It’s predominantly left wing activist groups which are arguing for it.
Any serious investor will look at a company’s accounts and annual statements which give significantly more and clearer information than CBC. Not least because CBC doesn’t necessarily reconcile to statutory accounts (you know, the actually important ones). Barclays 2014 CBC report is a good example. It simply tells us nothing material an investor would need to know.
The EU Parliament is voting on CBC next week
It way well demand it
Just the left wing groups, eh?
And of course it will have to reconcile with the accounts. Please don’t be silly. How it reconciles is the key question
EU parliament is not the markets, and is fairly left wing in itself. Regardless, it is not the markets who are asking for this are you said on the video.
I quote:
“The discussion draft does not include any requirement or recommendation to reconcile information reported in the CBCR template to consolidated, statutory or audited accounts, or to locally filed information (e.g. income tax returns).”
I would have though a self-proclaimed tax and accounting expert, who also claims to have invented CBCR (though a similar idea was used in the extractive industries in the 70s) would have known this.
For an investor, CBCR is about as useful as my 3 year old’s picture of a rainbow. Both aim to please but neither give any real insight as to what you are looking at.
If all you can resort to is ad hominems and untruths I’m very happy to welcome you to the automatically deleted list on this blog
And I most certainly did not say what you quote me as saying yesterday
Untruths?
I watched you speaking and you said the market – investors and shareholders – are asking for CBCR.
They aren’t.
Likewise, it is well known that CBCR will not reconcile to consolidated accounts. Apart from the fact that no auditing standards for CBCR have yet been approved for use (under Article 26 of Directive 2006/43/EC) we have the fact that corporation tax paid in the CBCR accounting period is unlikely to correspond to the accounting tax charge.
CBCR only looks at the amount of tax paid. So it takes no account of deferred taxation, capital allowance regime, loss provisions etc. It will therefore NOT tie up to financial statements.
As PWC helpfully point out with an example (on p22)
http://www.pwc.co.uk/en_UK/uk/tax/assets/a-practical-guide-to-the-uk-regulations-cbcr-under-crd-iv.pdf
You can even dislose your CBCR results in different ways within the legislation at the company’s own discretion.
As I say, CBCR gives no useful information for an investor and actually can easily be misinterpreted, as you proved when looking at Barclays CBC report.
CRD IV is not country-by-country reporting as per the OECD template for example
So what you are saying is nonsense
I have criticised CRD IV and did yesterday. Obviously you ignored that part
And investors are calling for country-by-country reporting – the Local Authorities Pension Funds have, for example
Given that the OECD CBC won’t be implemented till 2016 at earliest, and that it is CRD4 which the EU has implemented and it is under that legislation Barclays have provided a CBC report giving us no useful information whatsoever, it look sto me like you are trying to change the frame of the debate.
However, we can look to the OECDs report to see what ideas they have for CBC.
The Report states:
“the country-by-country report will be helpful for high-level transfer pricing risk assessment purposes.” It further emphasizes that such information “should not be used as a substitute for a detailed transfer
pricing analysis of individual transactions and prices based on a full functional analysis and a full comparability analysis” and such information “does not constitute conclusive evidence that transfer prices are or are not
appropriate.” Finally, the Report states that the information should not be used “to propose transfer pricing adjustments based on a global formulary apportionment of income.”
So no unitary taxation or CCCTB type affair for the OECD, and the OECD admit that CBC doesn’t give conclusive evidence of profit shifting.
Moreover, the OECD CBC report looks very much like the EU CRD4 one, given it only looks at tax paid (cash) and tax accrued – ignoring deferred tax and other provisions. Which by definition mean that the OECD CBC report will fall foul of the same issue the EU report does – it won’t reconcile to financial statements and consolidated accounts.
Again, as a tax and accounting expert and inventor of CBC, I would have thought you knew this?
I’m still waiting for you to give me one, just one piece of useful information for an investor from the CBC report.
By local authority pension funds, you mean the local authority pension fund *forum*, don’t you? The ones who pay you? And the LAPFF itself doesn’t manage any money. It’s a talking shop/pressure group for various local authority pension fund trustees. Who also don’t manage any money themselves. Proffessional pension fund managers do that.
As for talking nonsense, I’m giving you evidence from the EU and OECD themselves. You are simply responding without giving any answers – just ad homs. It’s the debating version of sticking your fingers in your ears and screaming.
Which brings me back to my three year old.
You clearly have not read the OECD template
I have
You are, as ever, talking ill informed nonsense – – for example on tax provisions
And the OECD report HAS to reconcile with the accounts
The delete button will now be applied to your further comments
You mean this OECD template?
http://www.keepeek.com/Digital-Asset-Management/oecd/taxation/guidance-on-transfer-pricing-documentation-and-country-by-country-reporting_9789264219236-en#page44
“You are, as ever, talking ill informed nonsense — — for example on tax provisions”
Let me quote the OECD (p42):
“The current tax expense should reflect only the operations in the current year and should not include deferred taxes or provisions foor uncertain tax liabilities”
Pretty clear what they say – and this is not compliant with GAAP or IFRS. So this CBC will not match up to the financial statements.
“And the OECD report HAS to reconcile with the accounts”
Again, I quote from the template (p40):
“It is not necessary to reconcile the revenue, profit and tax reporting in the template to the cosolidated financial statements…….Adjustments need not be made, however, for differences in accounting principles applied from tax jurisidiction to tax jurisdiction.”
Again, pretty clear. CBC report does NOT need to reconcile with accounts.
Making you wrong in both cases, according to the OECD.
I assume you will simply delete my comment as you seem to have a serious aversion to anyone who might know more about something than you do, and more of an aversion still to them proving it – and proviing you wrong.
Sure the template need not reconcile with the accounts
Nor does IFRS 8 disclosure
Show me one that does not
Imagine a company that will declare inconsistent turnover, profit or tax and then see how the questions flow
The template accords with IFRS
And in practice it will reconcile
We have had our final exchange
Congratulations Richard. It is about time we had someone speaking up for the essential beneficence of government. Keep up the good work!
Oh my, that is some dizzying cerebral cortex Mr Murphy.