Investors Await Companies Dishing Out More Tax Details

Talking Tax

Coming soon to corporate financial statements: a lot more tax transparency.

After seven years and three rounds of proposals, the Financial Accounting Standards Board in December published new rules requiring companies to shed light on the income taxes they pay to federal, international, and state governments.

The disclosure rules, which kick in as early as 2025, are a response to years of complaints that current financial reporting rules offer too few details about tax obligations. Soon, companies will have to separately list any jurisdiction that accounts for more than 5% of their total tax obligations. Publicly traded companies will have to further break down how they calculated their effective tax rate, so investors and other financial statement readers can contrast it with their statutory rate.

Bloomberg Tax reporter Nicola M. White spoke with David Gonzales, a vice president at Moody's Investors Service, about what kind of details companies will have to provide and how investors and analysts could use them.

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