Disclosure of Tax Havens and Offshoring Act
- Sponsor
- Sen. Van Hollen, Chris [D-MD]
- Committees
- Banking, Housing, and Urban Affairs Committee (primary)
- Last action
- Jul 16, 2026
Bottom line
This bill mandates public country-by-country financial reporting for large multinational corporations, aiming to increase transparency on corporate tax practices and global operations.
What it actually does
This bill amends the Securities Exchange Act of 1934 to mandate that certain large multinational corporations publicly disclose detailed financial and operational information on a country-by-country basis. It requires reporting on revenues, profits, taxes paid, stated capital, accumulated earnings, employee count, and tangible assets for each tax jurisdiction where a company operates. The Securities and Exchange Commission (SEC) is directed to issue regulations to implement these new disclosure requirements.
Proponents argue
Proponents argue that this bill will enhance corporate transparency, deter tax avoidance by exposing multinational corporations' financial activities in tax havens, and provide investors and the public with crucial information to assess a company's true financial health and tax contributions. They contend it levels the playing field for smaller businesses and helps governments recover lost tax revenue.
Opponents contend
Opponents typically argue that such detailed public reporting could expose proprietary business information to competitors, impose significant compliance burdens on companies, and potentially lead to misinterpretation of financial data by the public. They may also contend that it could disadvantage U.S. companies compared to international competitors not subject to similar disclosure requirements.
The bill is concise and its core provisions are straightforward, allowing an informed reader to quickly grasp its intent and mechanisms.
Section 2(a), adding Section 13(t)(1) to the Securities Exchange Act of 1934.
Definitions for Country-by-Country Reporting
This provision establishes the scope of the new reporting requirement by defining key terms. A 'covered issuer' is a multinational enterprise group with annual revenue above a threshold set by the SEC, conforming to international standards. A 'constituent entity' is any separate business entity of that issuer. A 'tax jurisdiction' includes countries and fiscally autonomous territories or possessions, ensuring comprehensive coverage.
Supporters argue
Supporters argue that clear definitions are essential for effective and consistent implementation of country-by-country reporting, ensuring that the intended scope of companies and jurisdictions is accurately captured.
Critics contend
Opponents might argue that the definitions, particularly the revenue threshold, could be set too broadly or too narrowly, potentially capturing companies that should not be subject to such extensive reporting or missing those that should.
Tradeoffs
Balances the need for comprehensive reporting with the administrative burden on companies, depending on where the SEC sets the revenue threshold.
Section 2(a), adding Section 13(t)(2)(A) and (B) to the Securities Exchange Act of 1934.
Mandatory Disclosure of Financial Performance on a Country-by-Country Basis
This core provision mandates that covered issuers submit reports to the SEC containing specific financial and operational information for each constituent entity and each tax jurisdiction. This includes the legal name, tax residence, and main business activity of each entity, as well as aggregated revenues (from related and unrelated parties), profit/loss before tax, taxes paid, accrued tax expense, stated capital, accumulated earnings, number of employees, and net book value of tangible assets for each tax jurisdiction.
Section 2(a), adding Section 13(t)(2)(B)(iii) to the Securities Exchange Act of 1934.
Special Rules for Entities Without Tax Jurisdiction
This clause specifies how to report financial information for constituent entities that do not have a tax jurisdiction of residence. Their information must be aggregated and consolidated, and if such an entity has an owner, the owner's share of revenues and profits must be aggregated with the owner's tax jurisdiction of residence. This aims to prevent loopholes where entities might avoid reporting by not having a clear tax residence.
Section 2(a), adding Section 13(t)(2)(C) and (D) to the Securities Exchange Act of 1934.
Reporting Period and Filing Deadline
This provision defines the reporting period as the 12-month period of the covered entity's applicable financial statement or, if none, the 12-month period ending on the last day of its taxable year. It sets the filing deadline for the report to the SEC as the due date (including extensions) for filing the covered issuer's tax return in its multinational enterprise group's resident tax jurisdiction.
Section 2(a), adding Section 13(t)(2)(E) to the Securities Exchange Act of 1934, and Section 2(b) of the Act.
SEC Rulemaking Authority and Implementation Timeline
This provision directs the SEC to promulgate regulations to carry out the country-by-country reporting requirements, ensuring they conform to United States or international standards, including those from the IRS. It sets specific deadlines: a proposed rule within 270 days of enactment and a final rule within 1 year. The information must be provided in a machine-readable format and made publicly available online. The effective date for the new reporting requirement is 1 year after the final rule is issued.
The definition of 'covered issuer' states that it applies to a multinational enterprise group with annual revenue 'of not less than an amount determined by the Commission to conform to United States or international standards for country-by-country reporting.'
Section 2(a), adding Section 13(t)(1)(B) to the Securities Exchange Act of 1934.
Why it matters:This is standard legislative practice to delegate technical specifics to regulatory agencies, allowing for flexibility and alignment with evolving international standards (like the OECD's BEPS Action 13, which often uses a €750 million threshold). It is not necessarily evasive.
Case for: Supporters argue that delegating the revenue threshold to the SEC allows for adaptability to changing economic conditions and international norms, ensuring the regulation remains relevant and consistent with global best practices without requiring new legislation.
Case against: Critics might argue that leaving the specific threshold to the SEC introduces uncertainty for businesses and could allow for a threshold to be set that is either too low (burdening smaller companies) or too high (missing significant tax avoidance).
Estimated impact: The specific revenue threshold will determine the exact number and size of companies subject to the reporting requirements, significantly impacting the scope of transparency.
Requires the information provided under the new Section 13(t) to be in a machine-readable format prescribed by the Commission and 'made available to the public online, in such machine readable format as the Commission shall prescribe.'
Section 2(b)(2) of the Act.
Why it matters:This is a technical implementation detail, often placed in rulemaking sections. Its placement is standard, but its impact on transparency is significant.
Case for: Proponents emphasize that public, machine-readable data is essential for transparency, enabling researchers, journalists, investors, and the public to easily access, analyze, and compare corporate financial information across jurisdictions, maximizing the bill's impact.
Case against: Opponents might argue that making such detailed data publicly available in an easily digestible format increases the risk of misinterpretation or misuse of proprietary information, potentially harming companies.
Estimated impact: Significantly enhances the practical utility and impact of the disclosure requirements by making the data accessible for broad analysis.