United States: SEC signals support for country-by-country reporting

This report highlights SEC comments regarding the increasing pressure over public CbC reporting.

This report highlights SEC comments regarding public CbC reporting

The U.S. Securities and Exchange Commission (SEC) has signaled its support for the Financial Accounting Standards Board’s (FASB) project to prioritize corporate public country-by-country (CbC) reporting.

At a hearing of the Senate Banking, Housing and Urban Affairs Committee, U.S. SEC Chair Gary Gensler made comments in support of FASB’s plan for companies to provide greater tax transparency. Gensler indicated that the SEC is looking at the need for increased tax and financial reporting by multinational entities.

“I think that would be a productive approach to have such disaggregation that FASB is considering right now,” Gensler said at the committee hearing.


CbC reporting is part of the OECD’s base erosion and profit sharing (BEPS) Action Plan 13.  Under this action plan, multinational companies must provide a breakdown of key elements of the financial statement by jurisdiction.

Currently U.S. corporations are not required to publicly disclose a breakdown of income taxes paid or accrued by country. However, with corporations’ global tax payments facing growing scrutiny from global investors and non-government organizations (NGOs), FASB has undertaken a project intended to improve the transparency and decision usefulness of income tax disclosures.

FASB is expected to release draft rules in the upcoming months providing more information on disaggregate tax reporting on a CbC basis.

KPMG observation

Gensler’s comments were reported in the press with, according to some observers, an over-exuberance from those hoping to see requirements for greater tax transparency placed on U.S. multinationals. However, Mr. Gensler’s comments need to be considered in light of the fact that when encouraged to include such CbC tax reporting requirements as part of the ESG reporting guidance issued last March, the SEC declined to do so.

Tax professionals believe that Gensler’s comments reflect a general trend towards greater tax transparency requirements by governments globally, but do not necessarily signal imminent action by the SEC. In addition, the final guidance issued by FASB may not recommend disclosures as extensive as the EU Directive or the recommended guidelines issued by NGOs such as the Global Reporting Initiative. Read more about the EU Directive: TaxNewsFlash

The EU Directive requiring mandatory public disclosure of CbC corporate income tax data has been a catalyst driving multinational entities to consider whether they are ready to comply with such rules, and whether such public disclosures would adequately represent a fair picture of their companies’ global tax contribution. Certainly, FASB guidance and SEC support for such work are in line with this global trend that some do not see abating.

The KPMG U.S. Tax ESG team has developed multiple technology and data tools to allow companies to assess the implications of public disclosure of CbC tax payment data on their organizations, as well as a platform to collect and report the total tax impact of all tax payments borne and/or collected. KPMG will be monitoring developments and will continue to keep entities apprised of new developments as the tax transparency environment evolves.

For more information, contact a KPMG tax professional:

Brett Weaver | baweaver@kpmg.com

Matt McNeill | mgmcneill@kpmg.com


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