Country-by-country reporting is not tax data

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One of the key messages I wanted to get across in the Bundestag on Monday, and definitely succeeded in delivering, is that country-by-country reporting (CBCR) does not deliver tax data. What it delivers is accounting information.

This distinction is important. In the first instance it is important because the argument that CBCR data is tax data is being used to keep it secret. Because the OECD has suggested it be supplied to tax authorities it is now being said, especially in the USA but almost as strongly in Germany (I think) that this means it cannot be placed on public record because that would breach the duty to ensure tax data is keep private.

Let's be clear, this is nonsense for a wide variety of reasons.

First, there is a whole mass of information that must be supplied to tax authorities that very definitely need not be kept secret as a result, and whose disclosure would never be a breach of tax secrecy. My name is, for example, on my tax return and also on this blog and is as a result well and truly in the public domain. In that case the argument that information supplied to a tax authority must be secret is just wrong.

Second, as I argued before the Bundestag, CBCR was never designed to be tax data. It was always designed as accounting data that might be of use to tax authorities amongst many others, some of whom I identify here. Since, as I made clear, I first thought up the idea of country-by-country reporting as accounting data I was very well placed to say those claiming it is tax data are wrong.

Third, those who argue that neither the OECD or tax authorities should publish this data wholly, and I very strongly suspect quite deliberately, miss the point. No one is asking tax authorities or the OECD to publish this information. It is not, and never has been, within their remit to do so. Nor is it the OECD's job to create accounting standards. This is a job for the International Accounting Standards Board, the US FASB and others, although in this area it is quite astonishing that these accounting firm dominated bodies refuse to take any actions at all.

But that does not mean that the EU and any government cannot require CBCR: it is completely appropriate for a government or the EU to decide what should be included in a set of financial statements to meet the needs of all the users of that data even if the IASB and others claim that they only need act in the interests of providers of capital to companies. And there is absolutely no territorial limit whatsoever to the data that a country may request of the accounts that it requires be published.

This last point is glaringly obviously the case. International Financial Reporting Standard 8 on segment data allows and and encourages the publication of data on a geographic basis, broken down by territory (which is often, but not always on a variety of country and continental bases) and there is no question at all about the fact that this is legal. If it is then so is country-by-country reporting data. Come to that, consolidated accounts require the inclusion of global data. Again, if that is legal so is country-by-country reporting data. So the argument that the EU does not have the authority to require publication of this data is just wrong: all the precedents for it to do so exist if - as it is as glaringly obviously it was always intended that it should be - it is accounting data.


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