David Jetuah, Accountancy Age, Thursday 3 June 2010 at 07:44:00

Lobby group steps up pressure for country by country reporting


Companies must lift the lid on how much money they make through theirsubsidiaries in poor countries, says Christian Aid.

By lumping their profits into one consolidated bundle it is impossible towork out how much tax multinationals are, or should, be paying, critics say.

The charity has added its voice to that of Dave Hartnett, HM Revenue &Customs permanent secretary, who has warned the issue was on the agenda of theUK and several other governments. Hartnett told Accountancy Age earlier thisyear that the UK would be pushing for country-by-country reporting. Heemphasised some countries receive more in aid than they did in tax receipts,despite allowing big multinational to set up shop.

Last week Christian Aid said it has contacted ?thousands of its supporters?asking them to encourage multinationals including Marks & Spencer,Rolls-Royce, BT and Barclays to respond to a Christian Aid survey about tax anddevelopment. The group has already written to all FTSE 100 companies, askingthem whether they would support the introduction of a new, more transparentaccounting standard.

Country-by-country report*ing would mean ?tax anomalies could be more quicklyspotted,? the body said.

Reading between the lines, Christian Aid is trying to call the bluff of bigcompanies and looking at the numbers it is clear to see why. What Christian Aiddescribes as ?tax-dodging? by companies trad*ing internationally costsdeveloping countries some $160bn (110bn) in lost tax revenue every year,according to its calculations. The sum is around one-and-a-half times theforeign aid poor countries collectively receive every year.

Unsurprisingly, companies have dug their heels in on the issue.Country-by-country reporting would be a heavy burden in terms of annual reportswhich already weigh in heavily. However, accountancy standard setters aremulling country-by-country for the mining industry, so companies may have afight on their hands