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Activists and taxpayers clash over country-by-country reporting

24 April 2012

Salman Shaheen

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Country-by-country reporting remains the solution for many in the tax justice movement, but multinationals are set against it.

On May 2, they will go head to head at International Tax Review’s Tax & Transparency Forum in London to debate one of the most controversial issues in tax.

Richard Murphy, one of the chief architects of country-by-country reporting, has been arguing for more than a decade that for tax avoidance to be stamped out, multinational companies must report their profits and taxes in each country in which they operate. But where once he spoke from the fringe of the debate, the financial turmoil, cuts, protests and media scandals surround companies perceived to be paying less than their share of tax, have made country-by-country reporting an issue companies cannot afford to ignore.

Speaking at the Tax & Transparency Forum at London’s Grand Connaught Rooms on May 2, Murphy will argue that every multinational should mandatorily report taxes paid and limited cash flow and balance sheet data for each and every country where they trade, without exception.

Murphy will make the case that far from just being about tax, country-by-country reporting is a full accounting system. He will demonstrate why it is necessary for developing countries, for tax authorities and how it can be beneficial to companies and their shareholders too.

Chris Lenon, group strategic adviser for tax policy at Rio Tinto, and Stephen Blythe, tax director at BP, will make the case for business, discussing their concerns with country-by-country reporting and the importance of businesses having positive relations with their national stakeholders.

Blythe will look at the pragmatic measures that regulators could take to address industry’s concerns whilst still delivering meaningful and relevant information. He will raise concerns about multiple disclosure methodologies, including voluntary disclosures, and the need to ensure that the regulations remain focussed on addressing the anti-corruption goal. Blythe will make the case for limiting the disclosure of payments to government to the extractive industries and talk about the wider fair contribution debate and its relevance to all business sectors.

Lenon will look at the compliance burden and cost of country-by-country reporting, the level of reporting required, the timescale for brining it in, voluntary measures versus the EU, and differences between Dodd Frank in the US and the Extractive Industries Transparency Initiative (EITI).

As companies in the extractive industry, country-by-country reporting is already becoming a reality for Rio Tinto and BP.

As chair of the EITI, Clare Short, the UK’s former Secretary of State for International Development, is at the heart of practical work on the new reporting standard. Speaking at the forum, Short will summarise the experience of country-by-country reporting on revenues paid and received in extractive industries through the EITI. She will also explain how country level reporting will remain important when the transparency provisions on extractives under Dodd Frank and the EU Transparency Directive come into force.

The day will prove to be one of heated, but constructive debate, and tax directors and their advisers will get the inside story from some of the most prominent voices on both sides.

The forum is free to attend for tax directors and NGOs. For a full programme and details of how to register, click here.

International Correspondents