Country-by-Country Reporting for Multinationals

Full Title:
Disclosure of Tax Havens and Offshoring Act

Summary#

This bill would add a new rule to the Securities Exchange Act requiring many large multinational companies that file with the SEC to report their financial and tax information on a country-by-country basis. The reports must list basic information about each subsidiary (constituent entity) and aggregated financial totals for each tax jurisdiction. The reports must be published online in a machine-readable form and filed on a schedule tied to the company’s tax return.

  • Main change: Covered issuers (large multinational groups chosen by the SEC) must submit a country-by-country report with specified item-level data for each subsidiary and aggregated totals by tax jurisdiction.
  • Required data includes: subsidiary legal name, tax residence, place of incorporation, tax ID (if any), main business activity; and per-jurisdiction totals for related-party revenue, third-party revenue, profit or loss before tax, cash income tax paid, accrued tax expense, stated capital, accumulated earnings, number of full-time-equivalent employees, and net book value of tangible assets (excluding cash, intangibles, financial assets).
  • Filing rules: Reports cover the issuer’s 12-month financial period and must be filed by the due date (including extensions) for the group’s tax return in the jurisdiction where the multinational is resident.
  • Public access and format: The SEC must require the report in a machine-readable format and make it publicly available online.
  • Timing for rules: The SEC must propose implementing rules within 270 days and issue a final rule within 1 year; the reporting requirement starts 1 year after the final rule.
  • What is unclear: The bill leaves the exact revenue threshold for covered issuers to the SEC and uses a non-standard definition of “tax jurisdiction” that appears to exclude countries; the text does not explain how those points will be resolved.

What it means for you#

  • Public companies / Large multinationals: If your company is determined by the SEC to meet the revenue threshold and is part of a multinational group, you will need to collect and publish detailed country-by-country financial and tax data for subsidiaries and aggregated tax-jurisdiction totals.
  • Subsidiaries and affiliates: Parent companies will need to gather legal names, tax residency, incorporation place, tax IDs, and main business activities for each separate business entity in the group.
  • Investors and researchers: More standardized, machine-readable country-level data would be publicly available, which could make it easier to compare where multinationals earn revenue and report profits.
  • Tax authorities / public watchdogs: The public availability of this data could make it easier for outside parties to identify where a company reports profits and pays taxes, though the bill does not describe specific data-sharing with tax authorities.
  • Companies with entities that lack tax residence: The bill requires special aggregation rules for entities with no tax residence; owners’ shares of revenues and profits from such entities must be included with the owner’s tax jurisdiction totals.
  • Entities in U.S. territories: Territories or possessions of the United States that have fiscal autonomy are explicitly included in the reporting.

Expenses#

No publicly available information.

  • The bill itself does not include a fiscal note or cost estimate.
  • This change would likely create compliance costs for covered companies to collect, reconcile, and publish the required data (staff time, accounting, legal review, and IT work to produce a machine-readable file).
  • The SEC will incur rulemaking and technical work to design the data format and a public posting system, but the bill does not estimate those costs.
  • There is no explicit provision in the bill for fees, penalties, or funding for the SEC or for companies’ compliance.

Proponents' View#

  • The bill appears intended to increase transparency about where multinational companies earn revenue and report profits and taxes.
  • Requiring machine-readable, public reports could make it easier for investors, journalists, and analysts to compare company tax and business activity across countries.
  • The bill aligns reporting to U.S. or international country-by-country reporting standards by directing the SEC to conform rules to those standards.
  • Tying the filing deadline to the company’s tax return due date aims to coordinate reporting timelines with existing tax filings.

Opponents' View#

  • One concern is increased compliance costs for companies that must gather and verify detailed subsidiary-level and jurisdiction-level information.
  • The bill does not provide an explicit cost estimate or funding, so it is unclear who will bear rulemaking and enforcement expenses.
  • The definition of “tax jurisdiction” in the text appears to exclude countries and focuses on non-country jurisdictions and U.S. territories; this wording is unclear and may create confusion about how to classify locations.
  • The revenue threshold that determines which issuers are covered is left to the SEC; until the SEC sets that amount, it is unclear which companies will be affected.
  • Public release of detailed data (including tax identification numbers) may raise business confidentiality or competitive-harm concerns; the bill does not describe safeguards for sensitive information.
  • The bill does not specify enforcement mechanisms, penalties for noncompliance, or how this reporting will interact with existing international and IRS reporting regimes.