EconPapers    
Economics at your fingertips  
 

Country-by-Country Reporting and Commercial Confidentiality

Arthur J. Cockfield () and Carl D. MacArthur ()
Additional contact information
Arthur J. Cockfield: Faculty of Law, Queen's University, Kingston, Ontario
Carl D. MacArthur: Faculty of Law, Western University, London, Ontario

Canadian Tax Journal, 2015, vol. 63, issue 3, 627-660

Abstract: Country-by-country reporting (CBCR) has been touted by the Organisation for Economic Co-operation and Development (OECD) as a possible reform effort to inhibit aggressive international tax planning that leads to revenue losses for high-tax countries. Under current accounting, tax-law, and securities-law regimes, multinational enterprises (MNEs) are generally not required to report to domestic tax authorities or disclose to the public any significant financial information concerning their operations in foreign countries. CBCR would change this environment so that MNEs would be required to annually report financial information, including revenue, profit before income tax, and income tax paid in respect of every country in which they operate. Under the current OECD proposal, MNEs will be required to disseminate this information to tax authorities on a confidential basis and will not be required to disclose any information to the public. This article evaluates, from a transaction cost perspective, the claim that reporting such information on a geographic basis could harm firm competitiveness if MNEs were also required to disclose such information to the public or if the information were improperly disclosed by foreign tax authorities to rival firms. While the empirical evidence on this issue is mixed, the analysis suggests that CBCR will not unduly raise MNE transaction costs, in part because there are sufficient legal protections to guard against the revelation of sensitive commercial or trade secrets. In fact, CBCR represents a transaction-cost-efficient reform that could inhibit the use of revenue-reducing international tax-planning strategies. The article additionally discusses transition issues with respect to the implementation of different "maximalist" or "minimalist" approaches to CBCR.

Keywords: Foreign reporting; tax avoidance; privacy; base erosion and profit shifting; Organisation for Economic Co-operation and Development; information exchange (search for similar items in EconPapers)
Date: 2015
References: Add references at CitEc
Citations: View citations in EconPapers (3) Track citations by RSS feed

Downloads: (external link)
https://www.ctf.ca/CTFWEB/EN/Publications/CTJ_Contents/2015CTJ3.aspx (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ctf:journl:v:63:y:2015:i:3:p:627-660

Ordering information: This journal article can be ordered from
Canadian Tax Foundation, 145 Wellington Street West, Suite 1400, Toronto, Ontario, Canada M5J 1H8
http://www.ctf.ca/ct ... cations_Listing.aspx

Access Statistics for this article

Canadian Tax Journal is currently edited by Alan Macnaughton

More articles in Canadian Tax Journal from Canadian Tax Foundation Canadian Tax Foundation, 145 Wellington Street West, Suite 1400, Toronto, Ontario, Canada M5J 1H8.
Bibliographic data for series maintained by Jim Lyons ().

 
Page updated 2019-04-20
Handle: RePEc:ctf:journl:v:63:y:2015:i:3:p:627-660