Is the Global Trend Toward Tax Transparency and Disclosure a Surprise to Many Multinationals?: Insights from the ABA Tax Section Meeting in DC, May 6, 2016

By: Diane Ring

As I mentioned in my post earlier this week, I am in DC for the ABA Tax Section Meeting and am very much looking forward to this afternoon’s session on the EU State Aid Investigations. But at this morning’s session of the Administrative Practice Section, much of the conversation during the panel on the post-BEPS world focused on the array of new mechanisms that have emerged–or are being contemplated–at all levels (domestic tax law, international agreements, etc.) to provide increased transparency regarding multinational taxpayers and their tax treatment. Among the key examples were FATCA, BEPS-based country-by country-reporting, and new rules in the EU.

The fact that this was a topic at the ABA was not surprising, nor was the specific list of transparency and disclosure measures noted during the discussion. What did surprise me was the observation made during the panel that for many multinationals (not the really large ones, but the next tier down) this emerging trend was not on their radar. The point was made that these businesses did not have the staff to monitor the activities of the major international organizations such as the OECD and JITSIC in the same way that the very largest businesses did. Thus, despite the fact that the current world of transparency and disclosure was in fact foreseeable and reflects a perceptible evolution that has been taking place since the 1990s, it nonetheless took some of these taxpayers by surprise.

I am not sure what to make of this–but one point it suggests is that there was a general sense among these multinational businesses that although institutions such as the OECD played a role in international tax, it was a limited and predictable role that did not warrant ongoing and extensive monitoring by such businesses. I imagine institutions such as the OECD are getting more scrutiny from these businesses now.