OECD WORK ON MNES

[email protected] Analytical Database on Multinationals and their Individual Affiliates (ADIMA) Objective Provide statistics on the scale and scope of international activities of MNEs, taking a ‘whole of the MNE’ view Other OECD BEPS, UNCTAD World Investment Report, Eurogroups Initiatives Register (EGR), Traditional measures of internationalisation Challenges • Scale: Weaknesses in previous measures due to differences between existence and scale, or a lack of data availability • Scope: Digitalisation blurs the boundaries to activity • Dissemination: Privacy restrictions prevent data sharing Method Blending traditional with emerging data sources, in a Big Data framework similar to modern social media platforms. Focus on open data with careful data validation Output • A register of MNE affiliates • A set of indicators (at MNE and country level) • A timely monitoring tool of MNEs’ restructuring Use • Build on/contribute to other initiatives • Aid profiling work of NSOs and reduce asymmetries created by MNEs • Support narrative on trade-investment nexus and global value chains

2 ADIMA: A new approach to a register 

Annual Reporting TRADITIONAL

PermID

Business Register Serial Number EMERGING

 Website

3 Wal-Mart Stores: Using only traditional sources Network Graph Data Sources 

Annual Reporting TRADITIONAL

Identifiers 120 100 80 60 40 20 0 Companies Websites Discovered Max 4 Wal-Mart Stores: With all other sources

Network Graph  Data Sources

Annual Reporting TRADITIONAL

PermID

EMERGING Business Register  Serial Number Identifiers 120 100 Website 80 60 40 20 0 Companies Websites Discovered Max 5 Headquartered in 17 countries, primarily OECD countries…

CHINESE TAIPEI (TAIPEI) 1 Hon Hai Precision Industry Co Ltd LUXEMBOURG 1 ArcelorMittal SA JERSEY 1 Glencore PLC ITALY 1 Enel SpA INDIA 1 Reliance Industries Ltd SPAIN 1 Telefonica SA BRAZIL 1 Jbs SA AUSTRALIA 1 Wesfarmers Ltd RUSSIA 2 Gazprom PAO NK Lukoil PAO KOREA 2 Samsung Electronics Co Ltd Hyundai Motor Co SWITZERLAND 3 Nestle SA Roche Holding AG Novartis AG NETHERLANDS 4 Fiat Chrysler Automobiles NV Airbus SE Unilever NV Koninklijke Ahold Delhaize NV Total SA Carrefour SA Engie SA Peugeot SA Renault SA FRANCE 5 UNITED KINGDOM 6 Royal Dutch Shell PLC BP PLC Legal & General Group PLC Prudential PLC Tesco PLC Vodafone Group P GERMANY 10 Volkswagen ADaimler AG Bayerische Motoren Werke AG Siemens AG Deutsche Telekom AUniper SE Ceconomy AG BASF SE Deutsche Post Bayer AG Toyota Motor CorpHonda Motor Co LNissan Motor Co Ltd Nippon Telegraph and Telephone Corp Hitachi Ltd SoftBank Gr JAPAN 12 Aeon Co Ltd Sony Corp Panasonic Corp Marubeni Corp JXTG Holdings Inc Mitsubishi C UNITED STATES 48 0 10 20 30 40 50 60

Boeing Co Alphabet Inc Microsoft Corp Wal-Mart Stores Amazon.com Comcast Corp Pfizer Inc etc 6 ADIMA 100 employing nearly 20.5 million…

,2.5

Millions ,2.0

,1.5

,1.0

,0.5

,0.0 Jbs SA HP Inc BP PLC Total SA BASF SE BASF Engie SA Enel SpA Bayer AG Pfizer Inc Apple Inc Aetna Inc Nestle SA AT&T Inc Airbus SE Kroger Co Boeing Co Boeing Intel Corp Intel Uniper SE Sony Corp Tesco PLC Phillips 66 Phillips Sysco Corp Renault SA Renault Peugeot SA Hitachi Ltd Hitachi FedEx Corp Anthem Inc Daimler AG PepsiCo Inc Target Corp Siemens AG Novartis AG Novartis Aeon Co Ltd Unilever NV Humana Inc Alphabet Inc Alphabet Carrefour SA Telefonica SA Glencore PLC Chevron Corp Chevron Comcast Corp Comcast Ceconomy AG Gazprom PAO Ford Motor Co Motor Ford Microsoft Corp Marubeni Corp Marubeni Prudential PLC NK Lukoil PAO NK Lukoil Walt Disney CoWalt Disney Panasonic Corp Volkswagen AG Volkswagen McKesson Corp Wesfarmers Ltd DowDuPont Inc DowDuPont Mitsubishi Corp Home Depot Inc ArcelorMittal SA ArcelorMittal Amazon.com Inc CVS Health Corp Deutsche Post AG Post Deutsche Exxon Mobil Corp Mobil Exxon Roche Holding AG Holding Roche Hyundai Motor Co Motor Hyundai General Motors Co Toyota Motor Corp Motor Toyota General Electric Co JXTG Holdings Inc Valero Energy Corp Cardinal Health Inc Johnson & Johnson Wal-Mart Stores Inc Nissan Ltd Motor Co Honda Motor Co Co Ltd Motor Honda Procter & Gamble Co Vodafone Group PLC Group Vodafone SoftBank Group Corp Dell Technologies Inc Technologies Dell Deutsche Telekom AG Lowe's Companies Inc Royal Dutch Shell PLC Dutch Shell Royal Costco Wholesale Corp Wholesale Costco Reliance Industries Ltd Industries Reliance UnitedHealth Group Inc Group UnitedHealth United Parcel Service Inc Service Parcel United AmerisourceBergen Corp United Technologies Corp United Technologies Marathon Petroleum Corp Petroleum Marathon Archer Daniels Midland Co Midland Daniels Archer Legal & General Group PLC Samsung Electronics Co Ltd Co Electronics Samsung Express Scripts Holding Co* Holding Scripts Express Verizon Communications Inc Walgreens Boots Alliance Inc Fiat ChryslerFiat Automobiles NV Bayerische Motoren Werke AG Hewlett Packard Enterprise Co Enterprise Packard Hewlett Koninklijke Ahold Delhaize NV Delhaize Ahold Koninklijke

Food Mining, oil and gas Chemicals Pharmaceutical Computers Electronics Vehicles Other Transport Utilities Wholesale/Retail Services Hon Hai Precision Industry Co Ltd Industry Hai Precision Hon 7 International Business CorpInternational Machines Nippon Telegraph and Telephone Corp …of which 10 million concentrated in manufacturing

Employment of MNEs in Manufacturing of 100 largest MNEs (sorted by revenues, 2016) 800,000

700,000

600,000

500,000

400,000

300,000

200,000

100,000

- Jbs SA HP Inc BP PLC Total SA BASF SE BASF Bayer AG Pfizer Inc Apple Inc Nestle SA Airbus SE Boeing Co Boeing Intel Corp Intel Sony Corp Phillips 66 Phillips Renault SA Renault Peugeot SA Hitachi Ltd Hitachi Daimler AG PepsiCo Inc Siemens AG Novartis AG Novartis Unilever NV Glencore PLC Chevron Corp Chevron Gazprom PAO Ford Motor Co Motor Ford Microsoft Corp NK Lukoil PAO NK Lukoil Panasonic Corp Volkswagen AG Volkswagen Wesfarmers Ltd DowDuPont Inc DowDuPont Mitsubishi Corp ArcelorMittal SA ArcelorMittal Exxon Mobil Corp Mobil Exxon Roche Holding AG Holding Roche Hyundai Motor Co Motor Hyundai General Motors Co Toyota Motor Corp Motor Toyota General Electric Co JXTG Holdings Inc Valero Energy Corp Johnson & Johnson Nissan Ltd Motor Co Honda Motor Co Co Ltd Motor Honda Procter & Gamble Co Dell Technologies Inc Technologies Dell Royal Dutch Shell PLC Dutch Shell Royal United Technologies Corp United Technologies Marathon Petroleum Corp Petroleum Marathon Archer Daniels Midland Co Midland Daniels Archer Samsung Electronics Co Ltd Co Electronics Samsung Fiat ChryslerFiat Automobiles NV Bayerische Motoren Werke AG Hewlett Packard Enterprise Co Enterprise Packard Hewlett International BusinessInternational Machines…

Food Mining, oil and gas Chemicals Pharmaceutical Co Ltd Industry Hai Precision Hon Computers Electronics Vehicles Other Transport 8 ADIMA: INDICATORS ADIMA: New approaches to MNE indicators

• Annual Reports are manually collected in a harmonised way for key variables • Geographic segments are taken where available, however: – Segments are not uniform in annual reports – Disclosure is not compulsory – Ambiguity in definition of location of sale/customer • New approaches needed for an estimation of country level sales and register component can aid these estimates

10 Key Financial Indicators

11 ADIMA: MONITOR ADIMA: A new approach to monitoring MNEs for restructuring

• Validation of the network graph creates a list of potential restructurings and events • Furthermore: – Can use sources such as Wikipedia hits to look for increases in interest – Then analyse news monitoring services with Natural Language Processing to identify events of interest

13 Early Warning System: General Electric in 2018

• Wikipedia view counts can help identify significant events

14 Early Warning System: News services can help to determine false positives

• Event 1: 17th January: GE “General Electric shares fall the most in two months on Tuesday, fourth-quarter results to be hit by $6.2 billion insurance portfolio charge” • Event 2: 17th-21st April: CFM Intl., GE Aviation “CFM Intl deploying some 40 technicians to assist Southwest in engine inspections” • Event 3: 20th June: GE “Walgreens Boots Alliance To Replace GE In Dow Jones Industrial Average” • Event 4: 26th-27th June: GE, GE Health, Baker Hughes “General Electric shares gain the most since April 2015 as company announces health care unit spin - off , Baker Hughes stake sale” • Event 5: 1st-2nd October: GE “John Flannery Out As General Electric Chairman And CEO” • Event 6: 30th October: GE, CFM Intl. “GE slashes its dividend to a penny , says it reorganizing its struggling power business”

15 Simulating the impacts of the Baker Hughes separation

General Electric Companies within Baker Hughes Structure: (inc Baker Hughes) US (11), Unknown (4), Malaysia (1), Luxembourg (1), Netherlands(1) Baker Hughes (A GE Company) Hughes Christensen LLC

Baker Hughes Inteq Geomechanics International Inc

Baker Hughes Malaysia Sdn GE Oil & Gas International Sarl Bhd

Baker Hughes - Druck, Inc. Baker Hughes bakerhughesdirect.com Baker Hughes Reservoir Gaffney Cline And Associates Software B.V. Inc

BAKER HUGHES NIGERIA Gaffney Cline & Associates Ltd

BAKER ATLAS DUBAI Lufkin Industries LLC 3% Share of PageRank

6% Share of Wikipedia Hits BJ Services Company LLC Lufkin Canada Holdings I Ltd 16 ADIMA: Future Plans

• Database release soon • Further expansion of coverage: – Methodologies are global in their nature, can be applied to any company. – Data structure is flexible will look to include further sources of data (public & private) – Limiting factor is data input and validation • Working with countries to develop validation tools

17 BEPS Country by Country Reporting (BEPS Action 13)

• New type of transfer pricing documentations that shows MNE group’s allocation of income, taxes, and business activities on a tax jurisdiction-by-tax jurisdiction basis

• Required for MNEs with worldwide group revenue greater than EUR 750 million beginning with fiscal year 2016

• Filed with tax administration in country of MNE group’s ultimate parent and shared with other countries where the MNE group operates  Country of ultimate parent entity provides aggregated and anonymised statistics of data collected on CbC reports to OECD

19 Template of CbC report (1)

Overview of allocation of income, taxes and business activities by tax jurisdiction Name of the MNE group: XYZ Group Fiscal year concerned: 2016 Currency used: USD

Revenues

Income Tax Tangible Assets Profit (Loss) Income Tax Accrued – Stated Accumulated Number of other than Cash Tax Jurisdiction Before Paid (on Unrelated Related Current capital earnings Employees and Cash Total Income Tax cash basis) Party Party Year Equivalents

Australia

Austria Azerbaijan

20 Template of CbC report (2)

List of all the Constituent Entities of the MNE group included in each aggregation per tax jurisdiction

Name of the MNE group: XYZ Group Fiscal year concerned: 2016 Main business activity(ies)

Tax Jurisdiction of Tax Jurisdiction organisation or Constituent Entities incorporation if resident in the Tax different from Tax Jurisdiction Jurisdiction of

Residence Research and Development Holding Managing or IP Purchasing Procurement or Manufacturing or Production Sales, Marketing or Distribution Administrative, Management Support or Services to of Services Provision parties unrelated Internal Group Finance Regulated Financial Services Insurance Holdingother shares equityor instruments Dormant Other Australia 1. ABC Pty Ltd 2. DEF Pty Ltd

3. GHI Pty Ltd

Austria 1. JKL GmbH 2. MNO GmbH Azerbaijan 1. PQR Corp

21 Aggregated CbC reporting statistics

# of Entities with Main Business Activity of Revenues CbCRs

# of # of Profit (Loss) # of Entities IP nt nt or before Income Income Tax Paid and Research Research Managing Managing Holding or or Holding Procureme Developme Tax Jurisdiction Unrelated Party Related Party Total Tax (on Cash Basis) Purchasing

UPE JURISDICTION (Reporting Jurisdiction) 350 600 200,000 300,000 500,000 120,000 30,000 90 113 38

FOREIGN JURISDICTIONS TOTAL 350 1,664 225,000 240,000 465,000 87,000 29,000 58 77 44 Nigeria 30 163 1,700 14,000 15,700 27,000 9,000 3 5 0 Other Africa 27 77 3,100 6,440 9,540 17,000 5,667 5 15 0

Argentina 40 184 27,000 32,000 59,000 4,500 1,500 3 6 3 Mexico 35 245 60,000 72,500 132,500 10,000 3,333 3 3 5 United States 34 148 45,000 40,000 85,000 10,000 3,333 0 2 2 Other Americas 32 64 10,000 9,000 19,000 7,500 2,500 5 6 2

Japan 29 46 9,500 870 10,370 2,700 900 3 11 3 Other Asia & Pacific 35 55 200 190 390 400 133 2 3 4

France 28 180 34,000 30,000 64,000 2,700 900 5 9 18 Germany 30 135 12,300 11,000 23,300 2,000 667 6 8 5 Ireland 29 190 11,700 12,500 24,200 1,500 500 8 3 0 Other Europe 33 150 7,500 7,500 15,000 1,500 500 3 6 2

Stateless 27 27 3,000 4,000 7,000 200 67 12 0 0 Note: This is a mock-up of a table an Inclusive Framework member might report. Data was randomly generated and is not in any way linked to the jurisdictions named or to actual MNE groups.

22 Accessing CbC data at the national level?

Scope exists, subject to legal arrangements, for NSOs to access national data from their tax authorities.

23