Investors to FASB

Investors to FASB – Prioritize Public Country-by-Country Tax Reporting

Investors to FASB: We Need Tax Transparency

Investors with over $2.9T in assets under management called on the Financial Accounting Standards Board (FASB) to prioritize public country-by-country tax reporting as part of FASB’s future standard-setting agenda. Signatories represented a broad coalition of asset managers, public pension funds, labor funds, international investors, foundations, and religious investors.

Public country-by-country tax information is “decision-critical for investors,” reads the letter, “as [they] gauge risks, assess value, and ultimately, allocate capital.” FASB is responsible for ensuring financial statements provide “decision-useful” information to investors and other users of financial reports. The investors called on FASB to require revenue, profit, tax, and additional information on a country-by-country basis. Then investors might better understand the financial, reputational, and economic risks of public companies.

Said Ian Gary, the Executive Director of the Financial Accountability and Corporate Transparency (FACT) Coalition:

There is clear and growing global investor and public momentum to see public country-by-country income tax reporting information. This momentum reflects a need from investors and other stakeholders to better understand tax financial and economic risks, as well as to improve transparency and promote public trust.

Investors to FASB: Background

In 2021, the Global Reporting Initiative implemented the first globally applicable country-by-country reporting standards for participating public companies. In addition, the European Union finalized a political deal to require a degree of public country-by-country reporting. The US House of Representatives passed the Disclosure of Tax Havens and Offshoring Act (HR 3007), which would require public country-by-country tax disclosure.

This information is essential in light of efforts by the US and other governments to crack down on the global tax race to the bottom. Any such change would have positive impacts on capital allocation (and strategic tax) decisions by public companies, including as a result of ongoing OECD negotiations.

Investors to FASB: Prominent Voices

Other prominent voices asked the FASB to increase tax transparency with the public country-by-country tax reporting information. These included:

  • CalPERS, the largest public pension fund in the US
  • Principles for Responsible Investment, and
  • Council of Institutional Investors,

The FACT Coalition

The FACT Coalition is a non-partisan alliance of more than 100 state, national, and international organizations. The Coalition works toward a fair tax system that addresses a global economy’s challenges and promotes policies to combat the harmful impacts of corrupt financial practices.

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