The exchange of account and financial information across borders with the objective of tax transparency is the new reality. Several regimes that are currently in effect or are scheduled for implementation in the near or mid-term future affect how organisations globally do business.
ChallengesBusinesses are increasingly expected to go beyond existing legal requirements and volunteer more information about their approach to the management of tax (i.e. their behaviors) and its outcomes (i.e. the taxes they pay and influence). Effectively communicating about a complex and potentially emotive subject such as tax is important but can be difficult, particularly in the absence of common standards. The purpose of this solution is to help demystify this landscape so you can start to think about how you could answer the five key questions below for your business.
Businesses face formal tax reporting obligations as well as an array of transparency expectations from stakeholders. The latter have increased markedly in recent years, stimulated by the broader sustainability debate and specific tax developments, and likely entrenched by the impact of COVID 19.Tax Transparency - A key part of a complex ESG puzzle Download PDF
Many large companies publish annual reports in relation to their financial performance and position which include key elements relating to their tax charge, cash tax and tax creditors and debtors in line with relevant standards. The level of tax disclosure in these reports will vary. For example, many groups now cite that tax is a principal risk for the organisation and may provide details in relation to specific developments such as the impact of state aid challenges.
Although there are a lot of different drivers for groups, and a wide variety of external transparency regimes groups may be aligned with, groups typically make voluntary tax disclosures under the following themes: context, approach, key matters, data and assurance.
Context
How and where do you operate? How does your tax strategy link to your ESG and overall strategy?
Approach
How do you approach tax risk, tax planning, and your interactions with tax authorities?
Key matters
What is specific to the tax profile of your business / sector that a reader should know about?
Data
How much tax do you pay? How much do you collect on behalf of tax authorities? What level of country detail do you need to provide?
Assurance
What level of assurance do you need for your statement?
Get in touch with our multi-disciplinary team of tax transparency, tax reporting and corporate affairs experts who have experience with helping clients at each stage of the tax transparency journey. By working with you to define the right level of tax transparency for you, we can help you to communicate with confidence and clarity.
