Country‑by‑country reporting (CbCR) is expanding beyond the OECD’s confidential framework, with the European Union, Australia, and the United States introducing public‑disclosure regimes that differ in purpose, scope, coverage, timing, and accounting definitions.
Legal character and purpose
- OECD CbCR – Confidential, risk‑assessment tool for tax authorities; not intended for public scrutiny.
- EU Directive 2021/2101 – Public CbCR aimed at increasing transparency and fairness of multinational tax arrangements; reports are filed with national tax administrations.
- Australia’s public CbCR – Stand‑alone public obligation administered by the Australian Taxation Office, influenced by the Global Reporting Initiative 207 to promote tax transparency for sustainability reporting.
- US FASB ASU 2023‑09 – Financial‑reporting standard (ASC 740 amendment) that requires public business entities (PBEs) to disclose a detailed effective‑tax‑rate reconciliation for investors; not designed for tax‑authority use.
- Proposed US Disclosure of Tax Havens and Offshoring Act – Would require public corporations to file a CbCR‑style report similar to the OECD model.
Scope and thresholds
| Regime | Who is in scope | Revenue threshold |
|---|---|---|
| EU public CbCR | EU‑headquartered groups and non‑EU groups with a qualifying EU subsidiary/branch | €750 million consolidated revenue over two consecutive years |
| Australia public CbCR | Multinationals with Australian operations | AUD 1 billion global revenue and at least AUD 10 million Australian‑sourced revenue |
| US FASB | Every entity subject to ASC 740 (all public business entities) | No revenue threshold; PBEs must provide quantitative tables, non‑PBEs only narrative |
| OECD CbCR | Multinationals with ≥ €750 million revenue (global) | Same as EU threshold (used for confidential filing) |
| Proposed US Act | Public corporations | Not specified in the source |
Jurisdictional coverage
- OECD – Seeks full jurisdictional coverage.
- EU – Requires disclosure for a named list that includes all 27 EU Member States, Iceland, Liechtenstein, Norway, and every jurisdiction on the EU’s non‑cooperative list; all other jurisdictions are aggregated under “all other tax jurisdictions.”
- Australia – Uses a different named list of 40 jurisdictions (e.g., Hong Kong, Singapore, Switzerland) and excludes Luxembourg, Ireland, and the Netherlands.
- US FASB – Applies materiality thresholds: a foreign jurisdiction is disclosed only if taxes paid there exceed 5 % of total taxes paid or if the difference between the local rate and the US statutory rate is ≥ 5 percentage points. State and local taxes are aggregated, with only the top one or two states described qualitatively.
- Implication – The same subsidiary can appear as a separate line in one regime (Australia) while being aggregated in another (EU) or omitted entirely (US FASB), leading to inconsistent cross‑jurisdictional pictures.
Timing of reporting
- US FASB – Effective for fiscal years beginning after 15 Dec 2024; PBEs will first disclose in filings released early‑mid 2026; non‑PBEs a year later.
- EU Directive – Applies to fiscal years starting on or after 22 Jun 2024; first calendar‑year reports due by Dec 2026 (12 months after balance‑sheet date). Some Member States (e.g., Romania, Spain) have earlier national start dates.
- Australia – Applies to income years commencing on or after 1 Jul 2024; first reports for FY 2024‑25 are due by 30 Jun 2026 (or Dec 2026 for calendar‑year groups).
- Result – No two regimes release a complete first‑year dataset on the same calendar date, and “FY 2025” data may cover different 12‑month periods across regimes.
Definitions and measurement bases
- All three public regimes derive figures from financial‑statement (book) concepts, not from taxable‑income calculations on tax returns.
- EU public CbCR defines turnover to include net turnover, other operating income, income from participating interests, and related‑party transactions. Intra‑group sales are reported at full amount, potentially inflating revenue figures for a jurisdiction.
- Australia requires further disaggregation of revenue from related parties outside the jurisdiction.
- US FASB focuses on reconciling statutory versus effective tax rates; jurisdictional detail is provided only when materiality thresholds are met, and the reconciliation is expressed in percentage‑point impacts, not dollar amounts.
- Tax accrued: EU reports current tax expense on taxable profits (excluding deferred tax and uncertain positions); Australia uses a similar current‑tax measure but also mandates an explanation when tax accrued materially differs from the amount recorded.
Practical implications
- Policymakers, researchers, and analysts who combine data from multiple regimes without adjusting for these structural differences risk drawing misleading conclusions about a multinational’s economic activity, tax burden, or profit shifting.
- For example, a Singapore subsidiary may appear as a distinct line in an Australian public CbCR, be aggregated under “all other tax jurisdictions” in the EU report, and be absent from a US FASB footnote if it does not meet the 5 % tax‑paid threshold. Apparent changes in reported activity could therefore reflect reporting design rather than real business shifts.
Key take‑aways for users of public CbCR data
- Identify the legal purpose of each regime (investor‑focused vs. tax‑authority vs. public transparency).
- Verify the scope and revenue thresholds to determine which entities are required to report.
- Map the jurisdictional lists to understand where data will be disaggregated versus aggregated.
- Align the reporting periods before comparing figures across regimes.
- Adjust for different accounting definitions (book income vs. taxable income, treatment of related‑party sales, current‑tax vs. deferred‑tax measures).
Accounting for these dimensions is essential to produce reliable cross‑jurisdictional analyses of multinational tax practices.
Source article: taxfoundation.org
