This is interesting, isn’t it?

The OECD needs to embrace radical reform to its country-by-country reporting standard

The OECD published the 79 comments it received on its consultation on the future of its version of country-by-country reporting yesterday.

I should make a confession now. One of those submissions is by me. I also signed two others, from Eurodad and GRI, because overall they made points my submission did not. I offer no apology; after all, despite the right-wing claims, I created country-by-country reporting as we now know it.

Country by country reporting, as we now know it, is what the OECD is saying that country by country reporting is. ‘Cuz, logically enough, what CbyC is is what the peeps who define CbyC is.

And as it’s possible to note here, given the complaints by Snippa, the OECD isn’t defining CbyC the way Snippa thinks CbyC should be. Therefore, the CbyC we’ve got isn’t the one that Snippa created, is it? For if it was he’d not be complaining.

The points I made can be simply summarised. They are first that CBCR cannot work as the OECD hoped because they got the technical accounting wrong in their standard, requiring aggregation by jurisdiction rather than consolidation. Aggregation involves double counting. That is never a good idea. The OECD has to get the accounting right now or its version of CBCR will never work as planned.

The OECD’s CbyC ain’t Ritchie’s. So Ritchie didn’t create it, did he?

4 thoughts on “This is interesting, isn’t it?”

  1. He won’t let go…….from his submission to the OECD;

    “as the OECD is aware, I created the first version of CBCR in the form we now have it”

  2. Sigh. There’s a point, he still doesn’t (or refuses to) understand: financial accounting is based on consolidated numbers, but tax is based on aggregated numbers. And, while you can reconcile the two, it ain’t pretty, so you have to choose where you want the mess to be. The OECD seems to have decided they would prefer ‘nice’ tax numbers and they’ll leave the exercise of how precisely those reconcile to the reported financial results to the reader. Ritchie is criticising them for having made this choice.

    However, Ritchie’s way is just as bad, if not worse. If you insist upon divvying up the consolidated financial numbers into countries, you end up with tax numbers that aren’t the same as the tax that has been paid locally. Given that that’s the main claimed benefit of CBCR, one wonders why Ritchie would think this is a good idea.

    The very nature of consolidation means you can get real taxable profits being turned into nothing in the consolidated accounts: consolidation eliminates any purely inter-company transactions, but the taxman taxes them as if they’re like any other transaction. Similarly, consolidation can generate transactions that either don’t exist in the real world or may already have happened in the real world. Aggregating the tax side at least means we have real tax data to work with. Attempting to consolidate it would mean you obscure the very transactions CBCR was created (by Ritchie) to illuminate.

  3. aaa

    “you end up with tax numbers that aren’t the same as the tax that has been paid locally. Given that that’s the main claimed benefit of CBCR, one wonders why Ritchie would think this is a good idea.”

    I think you fail to appreciate Murphy’s interests and talents.

    He is by nature an extraodinarily assiduous sniffer of stools. Whether the activity is of itself of any use to anyone is irrelevant. To Murphy it is the process of getting his nose deep in the sh1te that counts

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