My interest in country-by-country reporting is, I admit, personal, since first advocating it in 2003, so it was good to read this in Tax Notes International (behind a paywall) this morning:
Senior government officials from the United States, the United Kingdom, Australia, and Canada, participating in a roundtable on the OECD's base erosion and profit-shifting project November 30 at the 66th annual conference of the Canadian Taxation Foundation in Vancouver, British Columbia, seemed to agree that despite the somewhat uneven movement on other BEPS action items, implementation of the country-by-country reporting template is inevitable.
BEPS is not perfect, and we all know it. But international cooperation on tax is vital, and we also know that. Country-by-country reporting has become symbolic of progress on the issue of tackling multinational corporation tax abuse. That is why undermining it is so serious.
I sincerely hope Tax Notes International are right on this one.
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Sony may well be leading the way, albeit inadvertently, in country-by-country reporting: they have suffered a data ‘breach’ that is, for all practical purposes, the loss of all their data.
All of it. Ignore the managed news that leads you believe that ‘some’ employee and payroll data has been taken, and ‘some’ unreleased movies are on torrent-sharing sites. All, the data, terabytes of it, was exfiltrated through their game servers, password files and all.
Whatever schadenfreude there may be in reading the embarrassing behaviour that their Legal department was hiding with all those unmentionable non-disclosure agreements, the German Tax authorities are now in a position to construct a country-by-country report for Sony’s internal accounts, and tax them for the profits made in Germany.
Or so I am told. I would never, ever look at stolen data, even when it has been irrevocably placed in the public domain.
Every country that’s prepared to overcome such scruples can now see through Sony’s cross-border cashflows and locate their taxable profits correctly.
There is of course no question of any impropriety or deliberate concealment by the board and auditors of Sony; there are merely gentlemanly disagreements over the interpretation of ambiguities in tax and audit regulations, and it is entirely possible that Sony have at all times striven in good faith to correctly and honestly paid all their taxes where and when due.
I do not agree that such a leak would deliver country-by-country reporting data: it’s a little more than you imply
In fact, a lot more
We shall see.
As far as I am aware, the hundred or so terabytes of data that were exfiltrated include every spreadsheet, every departmental budget, all the sales and all the financial data, and all of the internal reports.
I am well aware of the manpower that goes into turning the corporate data mountain into consolidated accounts; but high-level reports are in there, too.
Bravo Richard. A new era indeed.
What was the ‘somewhat uneven progress on the BEPS action items’
All over BEPS right now – bit the process is only half way through, at best
SOUNDS like the OECD has not been delivering
When the whole point of the post is to say it is likely it will that’s a very odd comment
OK it’s a start with the good old Anglo Saxon countries. But where are the BRIC
countries in all of this?
That is a major issue
But not a reason for saying no progress is possible, in my opinion