According to a new report, secretive offshore tax avoidance practices are on the rise among multinational businesses. The report, released from the Financial Accountability and Corporate Transparency Coalition (FACT), finds that these practices put investors at risk because they are caught off guard when governments act to collect the lost tax revenue. The report recommends that the Securities and Exchange Commission (SEC) collect greater information from corporations on what taxes are being paid and which governments are receiving payments.
"This type of corporate tax avoidance is a theft from poor communities across the United States and around the world," noted Eric LeCompte, the executive director of the religious development coalition Jubilee USA and a member of FACT's executive committee. LeCompte served on a UN expert group that investigated this behavior. "This report demonstrates that hiding money offshore even harms the very people who invest in these companies."
The report references three prominent companies that may have used tax avoidance practices in recent years and now face action from tax authorities. The report urges the SEC to collect "country-by-country reporting" information which requires multinational corporations to annually disclose what payments they make to governments where they operate. Companies are already required to file these reports with the IRS but filing them with the SEC would give shareholders access to the information.
According to a 2016 report from the development organization Oxfam America, corporate tax avoidance drains approximately $111 billion a year from the United States, and an estimated $100 billion from some of the world's poorest countries.
"Financial transparency is essential to protect the most vulnerable," stated LeCompte. "The SEC should adopt country-by-country reporting as soon as possible."
Jubilee USA Network is an alliance of more than 75 US organizations and 550 faith communities working with 50 Jubilee global partners. Jubilee USA builds an economy that serves, protects and promotes the participation of the most vulnerable. Jubilee USA has won critical global financial reforms and more than $130 billion in debt relief to benefit the world's poorest people. www.jubileeusa.org