Profit shifting by corporations is estimated to cost the US government $70 – 100 billion annually.1 Globally, the OECD estimates revenue losses of $100 – 240 billion.2 The PRI, representing investors with $89 trillion assets under management, states that tax avoidance is key driver of global inequality.3
In October 2021, 136 countries agreed to a framework for global tax reform.4 In the US, increases in infrastructure and social spending are linked to tax reforms.5 The proposed Disclosure of Tax Havens and Offshoring Act will require public country-by-country reporting (CbCR) of financial (including tax) data by SEC- registered companies.
In November 2021, the European Union approved a directive to implement a form of public CbCR for multinationals operating in the European Union with group revenue of over $860 million.6
In April 2023, Australia introduced legislation which calls for multinational corporations of a certain size, operating in Australia to publicly disclose the information in their Country-by-Country reports (CbCr) broken down by jurisdiction, as well as publicly disclosing other new tax and financial information – also by each jurisdiction – not currently disclosed in confidential CbCr. The disclosures called for in the legislation are largely adopted from GRI Standard 207.7
Currently, Cisco does not provide disaggregated profits or tax payments in non-US markets, challenging investors’ ability to evaluate the risks to our company of taxation reforms, or whether Cisco is engaged in responsible tax practices that ensure long term value creation for the company and the communities in which it operates. Cisco’s
approach to taxation has been repeatedly challenged by tax authorities globally.8 In 2021, TaxWatch alleged that Cisco avoided £68 million UK taxes in 2019.9
The GRI Standards are the world’s most utilized reporting standard.10 The GRI Tax Standard was developed in response to investor concerns regarding the lack of corporate tax transparency and the impact of tax avoidance on governments’ ability to fund services and support sustainable development.11 It is the first comprehensive, global
standard for public tax disclosure and requires public reporting of a company’s business activities, including revenues, profits and losses, and tax payments within each jurisdiction.12
Oxfam America reports that investors with more than $10 trillion in assets under management have expressed public support for CbCR.13
This proposal would bring our company’s disclosures in line with leading companies who already report using the Tax Standard.14 Our company already reports CbCR information to OECD tax authorities privately, so any increased reporting burden is negligible.
1 https://thefactcoalition.org/trillions-at-stake-behind-the-numbers-at-play-in-u-s-international-corporate-tax-reform/
2 https://www.washingtonpost.com/us-policy/2020/11/19/global-tax-evasion-data/
3 https://www.globalreporting.org/news/news-center/backing-for-gri-s-tax-standard/
4 https://www.oecd.org/tax/international-community-strikes-a-ground-breaking-tax-deal-for-the-digital-age.htm
5 https://thefactcoalition.org/international-tax-reform-in-build-back-better-act-a-promising-start/
6 https://www.internationaltaxreview.com/article/b1vf7yc65qpzcd/this-week-in-tax-eu-on-track-for-public-cbcr-by-2023
7 https://www2.deloitte.com/content/dam/Deloitte/au/Documents/tax/deloitte-au-tax-insights-7-australia-introduces- public-tax-reportingaustralian-foreign-headquartered-multinationals-120423.pdf
8 https://www.reseller.co.nz/article/663741/cisco-nz-writes-4-6m-cheque-after-tax-investigation/
9 https://www.mirror.co.uk/money/city-news/eight-worlds-richest-tech-titans-24238557
10 https://assets.kpmg/content/dam/kpmg/xx/pdf/2020/11/the-time-has-come.pdf
11 https://www.globalreporting.org/news/news-center/backing-for-gri-s-tax-standard/
12 https://www.globalreporting.org/standards/media/2482/gri-207-tax-2019.pdf
13 https://www.oxfamamerica.org/press/press-releases/exxonmobil-chevron-and-conocophillips-shareholders-must-vote- to-ditch-secretivetax-practices/
14 For example: https://www.results.philips.com/publications/ar20/downloads/pdf/en/PhilipsCountryActivityAndTaxReport2020.pdf;
https://www.vodafone.com/about-vodafone/reporting-centre/tax-and-economic-contribution