Trade Publication Article

U.S. MNCs Put Up a Fight on Additional Disclosure

Furner, Zhan, Moore, Rebekah, Morrow, Michaele

2017

Overview

In July 2016, the Financial Accounting Standards Board (FASB) issued an Exposure Draft of a Proposed Accounting Standards Update related to income taxes. The proposal included an array of new disclosure requirements for income taxes and was open for comments until Sep 30, 2016. The resulting comment letters reflect a fierce debate among accountants, various tax organizations, and US corporations over the potential costs and possible offsetting benefits of these additional required disclosures. In particular, many large US multinational corporations (MNC) are concerned with the proposed new disclosures regarding foreign earnings and cash, especially previously untaxed foreign earnings. This article discusses the details of the financial reporting policies for foreign earnings and explains the resulting incentives for US MNCs to hoard their earnings overseas. It also explores the efforts of the FASB and the SEC to improve these financial reporting policies and the resistance to these changes from US MNCs.

• Publisher: Thomson Reuters (Tax & Accounting) Inc
• Subject: Accounting / Controlled foreign corporations / Corporate income tax / Corporate taxes / Disclosure / Dividends / Earnings / Earnings per share / Exposure drafts / FASB exposure drafts / Financial reporting / Fiscal policy / Foreign subsidiaries / Incentives / Income taxes / International taxation / Investment policy / Investments / Liability / Multinational corporations / National debt / Net income / R&D / Repatriation / Research & development / Tax rates