I noted yesterday that I co-authored, with John Christensen, what might fairly be called the first manifesto for tax justice that was published, in 2005.
In it (section 5.1) we called for country-by-country reporting, without actually giving it that name at the time. The information we called for was as follows:
1.The names of all countries in which a transnational company operates.
2. The names of the subsidiaries through which it operates in those countries.
3. What sales they make in those countries, both to people other than themselves (third parties) and
4. to other group companies (inter-group sales).
5. How much they spend on labour costs in each country.
6. How much they spend on other goods and services within each country, both purchased from third parties and on an inter-group basis.
7. What profit they make in each country in which they operate.
8. What tax they pay there.
9. What level of assets they employ in each country.
The italicised requests are included in the OECD BEPS template for country-by-country reporting.
We did not get item 5. We got the number of people employed instead. I can live with that.
We did not get 6. But we got tax provided for in the company's accounts instead.
I had not gone back to this list for some time.
I am astonished how close it was to the BEPS outcome. And pleased, too.
Postscript: I have been asked why we did not got exactly what we asked for. There are obvious reasons, and one regret.
We got labour headcount and not cost because there was a big fightback at the OECD on cost. I recall Deliitte being very excited on the issue. I want a Labour indicator. Head count biases to developing countries in most cases so I was willing to accept the compromise. I am not sure whether those opposing appreciated this.
The addition of tax provision to tax paid was to remove the confusion in the EU CRD IV where 'paid' had been interpreted as both the tax provision and cash paid in different countries. The obvious answer was both, and we got it.
The regret is on intra-group purchasing: the push back was on definitions. Purchases can turn up all over the place in financial statements. This one was lost and it does impair the usefulness. We only needed the data on distribution, admin and finance costs.