Submission Letter to FASB Board Concerning Income Taxes (Topic 740) Proposed Accounting Standards Update (Revised) March 25, 2019

On March 25, 2019, the FASB released Proposed Accounting Standards Update (Revised) concerning Income Taxes (Topic 740). There is a critical need to expand required disclosures for multinational groups (MNCs) under generally accepted accounting principles. Many MNCs carry material tax risks from their adoption over the past several decades of increasingly aggressive and sometimes questionable profit-shifting structures that seriously divorce legal form and reality. This letter submission to the FASB Board discusses: • Background on profit-shifting structures, • Need for CbCR – How CbCR would benefit stakeholders without creating undue compliance issues for MNCs, • Need for guidance on location in connection with new paragraph 740-10-50-10A (disaggregation of income or loss from continuing operations between domestic and foreign), and • Disclosures Concerning Unrecognized Tax Benefits. This letter’s primary message is that multinational corporations currently operate under a range of U.S. and foreign tax exposures, and CbCR information is critical for investors and other users of financial reports to assess: • The potential for material tax assessments, • Possible reputational and other commercial risks that could arise from aggressive tax structures, and • Management’s relative conservatism or aggressiveness with respect to tax matters. The letter encourages FASB to be a leader in developing appropriate accounting standards to increase corporate tax transparency in financial reports. If FASB does not take a leadership role, others including governments, international bodies, and private sector entities will design the global standards mandating increased corporate tax disclosures.