Delivering public tax transparency
In the wake of the global tax developments towards a more scrutinised world of tax, the role of tax functions is inevitably changing. Public tax transparency could play a significant part in this. In an increasingly transparent tax environment, companies may want to communicate their positive financial impact on the societies they operate in. In our third paper “How to implement public tax transparency”, we want to get to the very core of delivering public tax transparency. So, we’ll take a close look at the content that could be disclosed and the process of developing a tax transparency report.
How to implement public tax transparency
Act now and set a good example, which may help shape the way potentially mandatory public tax disclosures are designed in the future.
Highlights from the paper
What information could be disclosed?
Initially, organisations should decide what kind and what amount of disclosures are most appropriate for their circumstances. Tax disclosures should not undermine commercial confidentiality. We suggest that companies decide on their strategic focus by answering questions like the following: Who are my specific stakeholders, what information do they want to obtain and what additional information can help to tell the whole story? This can lead to a range of different approaches with quantitative information such as total tax contribution(s) and country-by-country reporting information and qualitative information like tax strategy as well as tax risk and control framework.
How to organise action
The process starts with the strategic decision as to whether or not to share (more) tax data publicly. In the second phase, you should start to engage with internal stakeholders and communicate the move towards public tax transparency to local tax teams, which will support you in collecting all the necessary data. Once the data have been collected, it’s all about calculations, consistency and getting comfortable with the numbers before you can begin the main phase in which you develop the report. As it’s common to publish a tax transparency report on an annual basis, it should be good practice to regularly update your reporting approach.
What should I do now?
Your very first step should be to decide how to respond to an increasingly transparent tax environment. The second step should be to adopt a position and start to develop a strategic response. Finding an approach to public tax transparency may be part of it.
