Treasury proposes new multinational reporting rules

The Treasury Department released a proposal on Monday that would require certain companies to annually report information relating to income and taxes on a country-by-country basis.

The proposal would apply to businesses that are the parents of multinational enterprise groups with an annual revenue of at least $850 million.

{mosads}The categories of information that companies would be required to report were developed along with other countries of the Group of Twenty (G-20) and the Organisation for Economic Cooperation and Development (OECD). The OECD released final international tax recommendations in October.

A spokesman for Treasury said Monday that the department is “proud to have played a leading role in developing the BEPS recommendations to help address tax avoidance by multinational corporations.”

BEPS stands for Base Erosion and Profit Sharing, the name OECD gave to its project of developing the taxation recommendations.

“We are fully committed to implementing the BEPS project, and these proposed country-by-country reporting regulations are an important step,” the Treasury spokesman continued. “Standardized country-by-country reporting and other documentation requirements will give tax administrations a global picture of where profits, tax, and economic activities of multinational enterprises are reported. This process has strong confidentiality protections built in, and Treasury and the IRS will ensure that countries meet these important standards.”

The proposed regulations were prepared by Treasury with the IRS.

“The Treasury Department and the IRS have determined that the information required under these proposed regulations will assist in better enforcement of U.S. tax laws,” the agencies said in the preamble to the proposed rules.

Some lawmakers and business groups have been concerned that the country-by-country reporting requirements could jeopardize sensitive business information.

House Ways and Means Committee Chairman Kevin Brady (R-Texas) said that he would review the proposal.

“New country-by-country reporting requirements on U.S. companies must be limited and should not make it even harder for our companies to compete,” he said in a statement, adding that Congress will not let Treasury move forward with policies “that enable foreign governments to misuse information reporting and exploit American companies.”

—Updated at 7:51 p.m.