ICC said that CbC tax reports, containing financial information relating to the business operations of multinational enterprises, could potentially be harmful to the relationship between taxpayers and tax authorities.
Urging the G20 to stand by its decision to maintain the confidentiality of such reports – as embodied in the OECD’s July 2013 Base Erosion and Profit Shifting (BEPS) Action Plan – Chair of the ICC Commission on Taxation Christian Kaeser said: “The relationship between taxpayers and tax authorities should be characterized by openness and trust, disclosure of tax data would negatively impact this important dynamic.”
The ICC letter to the G20 presidency was sent in response to recent calls for public disclosure of tax data and CbC reports in the context of transparency and a public “right to know”. While fully acknowledging the importance for tax authorities to have access to adequate information to ensure that businesses pay the correct amount of tax, ICC believes that the public release of the reports would risk exposing commercially sensitive information of businesses of all sizes and most notably of small- and medium-sized enterprises.
The ICC letter states that publication of the CbC reports would require significant revision of the reports’ feasibility and scope, leading to an excessive administrative cost and burden. “Since a report only has to be filed once a company engages in any cross-border activity, this may discourage cross-border trade and investment,” Mr Keiser noted.
Applauding the efforts of the G20 and individual governments to globalize taxation standards, ICC is calling upon the G20 to maintain its current stance that CbC reports are intended to serve as high-level risk assessment tools for tax authorities and should be kept from public release.
ICC welcomes the opportunity to remain actively engaged in the G20’s tax agenda process, which would hopefully lead to necessary changes in international and domestic tax systems, and will impact both the business community and international trade.