Much of the discussion in recent years about international tax reform has centered on two fundamental concepts: the need to combat schemes and structures used by multinationals to avoid taxes; and the need to improve tax transparency and accountability. The first has been driven largely by treasuries and finance ministries in developed countries, as they seek to bolster their nations' coffers following the financial meltdown. The demand for greater tax transparency and accountability has come from the public in general and nongovernmental organizations in particular, outraged at the disclosure of sweetheart tax rulings granted to large, influential taxpayers, and reports that some highly profitable businesses are not paying all the taxes they should.
This year has seen the first steps taken to implement the final recommendations in the OECD's base erosion and profit-shifting initiative, beginning with the filing of country-by-country reports under action 13. Although the OECD recommended that CbC reports be filed for years beginning on January 1, 2016, some countries (such as Japan, Switzerland, and the United States) have adopted different dates. Thus, a gap year exists in the filing regime. Bernadette Pinamont discusses the implications of the gap year and advises multinationals to take great care in preparing and filing their reports for 2016.
One place where BEPS and public accountability intersect is in the demands by some that CbC reports be made public. Parliamentarians attending a global tax transparency summit in London urged countries to adopt more transparency measures, including public CbC reporting of multinationals' profits, so citizens can see for themselves how much tax they pay. Pascal Saint-Amans, director of the OECD's Centre for Tax Policy and Administration, opposes such a move, arguing that it was "not the deal that was reached" by the OECD and G-20. The Tax Justice Network disagrees, calling the OECD's failure to require public CbC reporting one of the biggest disappointments of the BEPS project.
The European Parliament and member states are facing pressure from parties on the left to require countries to make the CbC reports available to the public. Still, France's attempt to require public CbC reporting hit a roadblock when the French Constitutional Council ruled that making the reports public violates the constitution because it could disproportionately affect the freedom of enterprise).
Despite the setback for public CbC reporting, the French Parliament has adopted other measures designed to improve transparency and accountability, including one that would provide protections for whistleblowers. Unfortunately, that measure cannot help convicted LuxLeakers Antoine Deltour and Raphaël Halet and their acquitted co-defendant Edouard Perrin. All three returned to court in Luxembourg recently, with Deltour and Halet seeking to reverse their convictions and Perrin trying to stave off a second attempt to prosecute him).
Australia is taking a leading role to promote tax transparency, providing the public with information about possible tax avoiders. The Australian Taxation Office recently released a report on corporate tax transparency. That report covered the 2014-2015 returns of Australian and foreign-owned public companies with more than AUD 100 million in sales, and some privately held Australian companies with AUD 200 million in revenues. It showed that, while the companies account for about 63 percent of total company income tax payable for the period, one-third of the companies reported no tax payable.
Stuart Gibson is editor of Tax Notes International.