So, CbyC doesn’t work then

I argued for years that we needed country-by-country reporting. We did. We still do. And so far we have not got it. The only public country-by-country reporting data we have to date is from banks. And so that’s what we have to look at.

OK.

The data is interesting. I will get to it, in other posts. What really got to me when working on this data was just how poor it was

So, CbyC doesn’t work then as peeps don’t have that information to hand.

Presumably that’s the death of the idea then.

16 comments on “So, CbyC doesn’t work then

  1. It would only be interesting if it showed what the Spud wants it to show. But high level data on revenue and profit by country is not necessarily going to be what shows up in the accounts filed in each country – take for example oïl drilled in Nigeria and sold in the UK. Which country gets the revenue and profit and what does it tell us?

    All it will ever show is a guide to where economic activity is happening. It will never show the process of value-adding and nor will it show evidence of the dishonesty that Potatohead wants to see. It’s pretty much a waste of time apart from very rough metrics

  2. Spud wants CbCR because he says it will help tax authorities understand the profits arising in their territories.

    There is already a mechanism for this. It is called a ‘tax return’.

    To the extent that they are interested, each country asks for a tax return from each entity with a presence in that country.

    What upsets Spud is that he isn’t allowed to look at the returns.

    But the people who need to know, know everything they want to know.

  3. A brief skim read of Spud’s ‘paper’ on CbCR includes the admission that a form of CbCR was proposed as early as the 1970s. So Spud finally has to admit that he did not ‘invent’ the concept.

    I wonder if that was because the paper was joint authored and peer reviewed.

    I’m sure in his own little echo chamber he will go back to claiming that he invented the idea.

  4. But if it’s a publically listed company, *anybody* can look at the company’s tax returns via their annual statement.
    Until I got bored I kept posting links on his blog to Google’s (or was it Amazon? can’t remember) annual company statement which listed, country by country, their income, outgoings, and tax paid.

  5. But if it’s a publically listed company, *anybody* can look at the company’s tax returns via their annual statement.

    Nope. Do not pass “Go” and do not collect $200.

    Income and income tax expense are calculated on IFRS or GAAP standards, not tax law. The only way to know taxable income and actual income tax expense are to review the tax returns.

    End of discussion.

  6. @ Andrew C
    In the early 70s, when I was spending much of my day reading accounts, country by country reporting for every country that comprised 10% or more of turnover *or* profits *or* gross assets *or* capital employed (for either the current or previous year) was not just proposed but required by UK GAAS. Some companies gave CbyC data for countries that accounbted for less than 10% on each criterion. Some groups only gave CbyC for those countries accounting for 10% of group turnover/profit/gross or net assets but each subsidiary company accounts gave a breakdown for countries that accounted for more than 10% of that company’s turnover/profit/assets so a competent analyst could dig out the data he wanted.
    I have pointed this out on previous occasions – I suppose that Murphy is trying to fudge an admission that he was wrong.

  7. But it’s the wrong data, he wants to play games with tax, ignoring what international tax treaties allow and calculating the tax he thinks is due not what is legally due. To do this he needs different information, as already stated most probably the tax returns from each country.
    Though given different tax rules I’m sure comparisons would be fraught with danger even then without extensive reworking

  8. Not only does he need tax returns from each country, he needs to have the knowledge of a tax layer in each country otherwise he’ll be wasting everyone’s time demanding explanations of every deduction or other claims.

    And some, if not most, of those returns will be in the local language, so he’ll also need the expense of getting them translated.

  9. “And some, if not most, of those returns will be in the local language, so he’ll also need the expense of getting them translated.”

    Plus he doesn’t know anything about tax…

  10. Shell published a very detailed tax report recently. John McDonnell criticised them for not paying tax in the UK, even though the report explained in great detail why they didn’t.

    Fuck CBCR. It’s a crap idea. Richie didn’t invent it, but it’s definitely stupid enough that he could have.

  11. jgh –

    It’s hard to know wot it is… the link won’t open. However, it appears you’ve linked to an annual report for Google… Which is just that; an annual report. Annual reports will disclose some tax related information (much of which is IFRS/GAAP basis, rather than tax basis), which is of limited value (at best) within the context of what we are discussing. Same goes for SEC filings. Attempting to puzzle out a corporate tax return from the information provided in an annual report or regulatory filings is a fool’s errand.

    One thing not mentioned here is that the sheer complexity of the sort of corporate returns RM thinks he can analyze. Here in the US of A, companies the size your average Fortune 500 firm upload their corporate tax returns directly into IRS computers. Why? Because the average corporate return for such a firm routinely exceeds 10,000 pages. The idea that a return prepared by literally hundreds of tax and accounting professionals can receive an accurate review by any single accountant (who has no access to primary documentation) is the stuff of bullshit.

  12. Bored burger, served with dull, dry brioche, a dressing of aged tomatoes and methanish mustard, with trimmings of soar boar belly, bored soar belly, and oldman’sfeetcheese.

    Et le chef vous propose, le montelpulciano servi au paysan en tasses de verre.

    Point is, if you give it a name like ‘CbyC’, before you know it the bloody thing’ll have an emoji and a wristband.

    Says he, who hasn’t thought of a better alternative.

  13. Dennis,

    [my emphasis]

    One thing not mentioned here is that the sheer complexity of the sort of corporate returns RM thinks he can analyze. Here in the US of A, companies the size your average Fortune 500 firm upload their corporate tax returns directly into IRS computers. Why? Because the average corporate return for such a firm routinely exceeds 10,000 pages. The idea that a return prepared by literally hundreds of tax and accounting professionals can receive an accurate review by any single accountant (who has no access to primary documentation) is the stuff of bullshit.

    As the much missed Devil was wont to say – fucking hellski.

    If the fat tuber really wanted to do something useful he’d campaign for tax simplification first. How much are those regulations costing in workers wages, higher prices, lower dividends and the opportunity cost of having very clever people to interpret them? That’s not including the costs of higher taxes to pay for their writing, implementation and enforcement.

  14. @John 77

    Quite so.

    Spud tried to claim that he didn’t know anything about some of the earlier CbyC accounting requirements and discussions, these being;

    The UN’s “Group of Experts in International Accounting Standards” which published recommendations in 1977 and

    The International Accounting Standard (IAS 14) which was published in draft in 1980.

    Both in spirit were CbyC reporting so it’s absurd of Spud to claim he ‘invented’ the idea.

    And Spud’s bluster that he didn’t know anything about these earlier ideas and that everyone had forgotten them is particularly laughable as IAS 14 remained on the list of International Accounting Standards until 2006 when it was replaced by IFRS 8 in 2006 – IFRS 8 itself dealing with segment reporting.

    In other words, Spud both claims to have been a brilliantly successful accountant in the 1990s and 2000s whilst at the same time claiming he was unaware of an important accounting standard.

    That Spud continues to claim the credit is particularly silly as the information above is neatly summarised in a 2017 publication by the Tax Justice Network.

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