Country by Country reporting: new Task Force report

For those who missed it last week (apologies for the delay) the Task Force on Financial Integrity and Economic Development has published a new report on country-by-country reporting. Available for free download, the report details a new system of accounting for multinational corporations (MNCs) designed to increase transparency and curtail tax evasion.

The new proposed protocol would require MNCs to disclose the full details of their commercial transactions by jurisdiction. As the sumamry says:

"Accountancy has a reputation for being dull. This reform is anything but dull. It is about asking every multinational company to account for where it is, what it is called in each place it works and to report what its financial performance is in that place."

Currently this does not happen: MNCs can consolidate all this data into a single set of regional or global accounts, and it is impossible to unpick these to work out what is going on at a country level. UP to 60 percent of global trade currently take place within MNCs, and current regulatory standards allow all this valuable country-by-country information simply to disappear from view.

Global Financial Integrity director Raymond Baker said in his foreword:

"Tax evasion by multinational corporations is one of the greatest drivers of illicit capital flight out of the developing world. County-by-country reporting is a low-cost, readily implementable way to ensure better business compliance with tax policy and fair business practices. The Task Force applauds the UK’s announcement earlier this week that it would push for country-by-country reporting at next week’s meeting of the Group of 20 in Berlin."

Richard Murphy, Senior Adviser to TJN, is the report's author, and you can link via his blog
or direct from the GFI site.