Public CbCR – Leveraging a Compliance Requirement into a Strategic Asset

A new era for tax transparency

The directive requires public disclosure of financial and operational information on a country-by-country basis, with the primary objective to increase transparency and accountability. The information captured goes beyond narrowly tax-related data and is directly relevant to investors, analysts, journalists, and civil society. Public CbCR is part of a broader regulatory movement towards corporate transparency alongside tax-focused measures such as DAC6 and GloBE, and wider frameworks addressing sustainability and employment including CSRD and the Pay Transparency Directive. Together, these initiatives share a common objective: greater visibility of corporate tax and financial information in order to increase transparency. They also reflect a growing expectation that companies should be open about their operations, finances, and conduct across multiple dimensions.

These developments are pulling tax matters out of the back office and into the public domain. Tax is no longer a question for the tax department alone – it has become a cross-functional concern with reputational consequences. Despite this, many companies still approach transparency requirements as a compliance burden. Handled correctly, transparency does not need to be a threat to companies. Rather, it can serve as a tool for building trust with investors, customers, employees, and the public. This article sets out the new public CbCR requirement, the risk of a passive approach, and how companies can turn disclosure into a strategic asset while adapting their tax departments to meet the new demands.  
 

From the tax authority to public scrutiny

Public CbCR requires MNEs with consolidated revenues exceeding EUR 750 million to publicly disclose financial and tax information per jurisdiction, including revenues, profit before tax, income tax paid, and accumulated retained earnings as a few examples. In addition to the information that by law must be included in the report, companies may also include voluntary disclosures, such as narrative context explaining their tax position, effective tax rate, or approach to tax governance. It is worth noting that, unlike the confidential CbCR submitted to the Swedish Tax Agency, the public CbCR is accessible to any reader without restrictions, which fundamentally changes its significance and broadens its implications for companies. In Sweden, the legislation entered into force in June 2023, applies for financial years beginning after 31 May 2024, and the first reports are due no later than 31 December 2026. This transparency creates a direct channel between a company’s financial performance, operational presence, and tax position on the one hand, and the perceptions of its most important audiences on the other. Different stakeholders will view the same data through different lenses and with different agendas. 
 

Numbers without context are material for misinterpretation

Like any significant regulatory shift, the introduction of public CbCR comes with both challenges and opportunities, whereby to reduce it to a question of regulatory compliance is to miss the broader context entirely, as well as the strategic opportunities it presents. Publishing more data inevitably increases reputational and strategic risk. Together with other transparency initiatives, the flow of information to external stakeholders is expanding rapidly, reshaping the entire information landscape for MNEs. In this environment, not having a clear and consistent answer is no longer an option.  

One of the most underestimated challenges of public CbCR is not collecting the data, it is anticipating who will read it. Consider, for example, a jurisdiction showing high profit but low reported tax paid. This may be read as evidence of profit shifting, when the explanation may simply be the timing of tax payments or the use of tax losses carried forward. Without context, these figures risk being interpreted as aggressive tax optimization or artificial profit shifting, even where the difference is entirely justified. Numbers without context are not transparency; they are material for misinterpretation. To complicate matters further, stakeholders are heterogeneous, meaning that an institutional investor analyzing an effective tax rate brings an entirely different frame of reference than a journalist, and the two may draw very different conclusions from the same data. Therefore, a layered communication approach is essential to meet their differing needs and levels of understanding, and companies that are unprepared for this kind of scrutiny may find themselves on the defensive side, where a proactive approach was within reach.

A second challenge is organizational. Tax departments have historically operated in relative isolation. As public CbCR brings financial and operational information into the public domain, disclosure decisions carry reputational consequences that extend well beyond the tax function. Responding effectively requires genuine cross-functional collaboration, with meaningful involvement from finance, legal, communications, and investor relations. Without that broader organizational commitment, the risk of producing disclosures that are technically compliant but strategically exposed remains significant.  

Despite the challenges that come with public CbCR, it also presents companies with an opportunity to take control of their own narrative. Rather than simply releasing figures, companies now have a formal platform to provide context, explain their approach, and shape how their financial and operational profile is understood by external audiences. Companies that engage with this proactively, rather than treating the report as a compliance output, can use it to demonstrate responsible corporate practices and strengthen their reputation.

Take control of the narrative

Companies can use public CbCR to strengthen trust with key stakeholders while ensuring that their disclosures remain coherent and consistent with the broader sustainability and corporate responsibility narrative communicated through other reporting frameworks. Where disclosed figures raise questions, companies can either wait for those questions to be asked, or get ahead of them by explaining the figures on their own terms. But this requires more than adding explanatory text to a report. It requires building a coherent narrative that runs consistently across all channels and stakeholder dialogues. It is not just about raw data, rather that companies present the data with clarity and coherence.  

In practical terms, this means three things. First, companies need a clear, outward-facing tax policy that reflects the company’s values and business strategy – not just an internal governance document. Second, the tax story must be integrated with sustainability reporting: public CbCR belongs in the CSRD context and should be treated as part of the company’s broader ESG communication, not as an afterthought. Third, recent reporting requirements have expanded beyond what traditionally fell under the tax department’s purview, meaning that cross-functional collaboration is no longer aspirational – it is a structural necessity for consistent compliance. 
 

The question is not whether the data will be scrutinized, but rather who will be the one telling its story

As demands for tax transparency continue to grow both at a local and a global level, multinational companies are navigating a new regulatory reality. The EU’s public CbCR directive is one of the most significant expressions of this trend, marking a substantial shift towards greater transparency for MNEs. Public CbCR fundamentally changes the role of the tax department. What was once a largely technical function focused on compliance and risk management is now expected to contribute to how a company positions itself with its external stakeholders. This is not a shift the tax department can navigate alone. It requires cross-functional integration that many companies have yet to achieve. Tax directors who embrace this shift become strategic partners to the CFO, the sustainability function, and the board. Those who fail to do so risk being sidelined in conversations that are already taking place about their company’s tax behavior.

The question is not whether a company’s tax data will be scrutinized – it will be. The question is whether the company will be the one telling the story. Companies that treat public CbCR as yet another reporting requirement risk becoming passive actors in a debate that is increasingly taking place without them, and about them. Companies that recognize that transparency, properly managed, is an asset rather than a threat, and that invest in building the cross-functional structures needed to manage it, are well positioned to strengthen trust with their most important stakeholders. The companies that get this right will not be the ones with the best figures, but the ones that are most prepared to explain their figures proactively. What distinguishes those companies is not the quality of their data, but the quality of their preparation. Public CbCR is not the finish line, but the starting point of a permanent, public conversation about tax, and it is time for companies to decide how they want to enter it.

Watch out for a follow-up one-pager, setting out concrete, actionable steps for turning public CbCR into a strategic asset.

For a comprehensive assessment of these legislative updates, please reach out to our specialists at Deloitte.