Country-by-country reporting in the EU Parliament today

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I am taking part in a conference in the EU parliament marking the anniversary of the Panama Papers today. I am talking about the role of country-by-country reporting in tackling illicit financial flows. These are my slides:

Tackling illicit flows: Country-by-country reporting

  • Richard Murphy
  • Professor of Practice in International Political Economy: City, University of London

What CBCR is

  • CBCR is accounting data: it is not tax data
  • CBCR shows what a multinational corporation does in each country in which it operates
  • It does this by publishing:
    • An abbreviated income statement including sales, profit and tax information
    • Some employment data
    • Limited cash flow data
    • Some balance sheet information
    • And some narrative explanation (hopefully)
  • This permits a tax risk assessment
  • But more importantly it is about holding global corporations to account locally

What CBCR does

CBCR changes:

  • The way we look at multinational corporations:
    • They are not monolithic entities but a patchwork of local enterprises that are integrated into something bigger than the parts
  • The way that multinational corporations account:
    • Their responsibility is no longer just to shareholders but to all their local stakeholders as well
  • Our understanding of tax:
    • Taxes are not a lump sum paid by one multinational company but are the sum of all the individual payments made in a great many places, and we have to understand them all
  • Corporate behaviour:
    • What we measure counts. If multinational corporations have to account locally it will change their behaviour in those places

Why CBCR will work

CBCR will work because:

  • It exposes who uses tax havens:
    • And no one enjoys that now
  • If MNCs know that their tax abuse can be exposed by CBCR they will change their behaviour:
    • No one wants to be shown to be cheating
  • It is easy to use:
    • And the work I am doing at City, University of London (and with others) intends to make that easier still
  • MNCs will know they can be held to account locally:
    • They will improve their local performance to meet stakeholder expectations as a result