Global Financial Integrity

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House and Senate Bills Seek to Address Tax Evasion by Multinationals in the U.S. and Abroad

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Offshoring and Corporate Inversion have Highlighted how Corporations Game Tax Systems

WASHINGTON, DC – At a time when Members of Congress need more data to inform their important deliberations on effective tax policy reform, two bills introduced this week in the House and the Senate seek to provide lawmakers with previously unreported data from multinational corporations, often referred to as “country-by-country reporting” information.

Just yesterday, Representative Lloyd Dogget (D-TX) and Senator Sheldon Whitehouse (D-RI) introduced the 2017 version of the Stop Tax Haven Abuse Act. The bill would require multinational companies to disclose in their public Securities and Exchange Commission filings basic financial information, including revenues, profits, and the number of employees, on a country-by-country basis. The current standard only requires that this information be provided on an aggregate basis. The bill also includes other measures against corporate profit-shifting and steeper penalties for accountants that setup tax evasion schemes.

Similarly, today Representative Mark Pocan (D- WI) introduced the Tax Fairness and Transparency Act, which includes three provisions aimed at offshore shenanigans played by multi-national companies to reduce their tax bill. The bill’s provisions would prohibit companies from deferring indefinitely the taxes they owe on their offshore profits, significantly cut down on corporate inversions, as well as require U.S. listed companies to provide their financial reporting on a country-by-country basis as opposed to in the aggregate, as with the Stop Tax Haven Abuse Act.

“The effects of multinational companies gaming the U.S. and foreign tax systems by shifting profits into no-tax jurisdictions to avoid paying taxes in the U.S. and other countries in which they operate, are devastating to the U.S. tax base, and to those of developing countries,” commented Heather Lowe, Legal Counsel and Director of Government Affairs at Global Financial Integrity. “U.S. legislators cannot currently see how multinationals are arranging their affairs to game the system, and if they can’t see it, they can’t correct it. The Tax Fairness and Transparency Act and the Stop Tax Haven Abuse Act will give Members of Congress information they need to do their job and clean up the U.S. tax system, and they will benefit developing countries in the process.”

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Notes to Editors:
Click here to read a summary of the Tax Fairness and Transparency Act.
Click here to download a PDF of the full text of the Tax Fairness and Transparency Act.
Click here to read a summary of the Stop Tax Haven Abuse Act.
Click here to download a PDF of the full text of the Stop Tax Haven Abuse Act.