Tax transparency

Tell your tax ESG story.

Tax transparency

Tell your tax ESG story.

What’s the issue?

The visibility of your tax contribution is crucial to your organisation’s ESG story.

After all, the ‘S’ is a major part of ESG: customers, employees, shareholders, regulators and the public expect organisations to be making a fair financial contribution to the societies you operate in.

Tax transparency is mostly voluntary right now, but there is a clear direction of travel towards mandatory reporting – just look at public country-by-country reporting being brought in across Europe, Australia and beyond. You’ll want to get on the front foot by publicly sharing your tax strategy, approach and contribution. What do you want your stakeholders to take away from your disclosures?

Clarity is everything here: not just about the numbers you report, but also their context. You – and senior stakeholders in the business – will need to be comfortable with clearly communicating what your tax position actually means, and why is it what it is.

And above all, make sure that your tax disclosures align with the business’ wider sustainability reporting.

The top two challenges facing tax leaders on tax transparency are:

Quality of data
Aligning disclosures with wider ESG reporting*

^{*Source: KPMG survey in March 2023 – of 500 UK Tax Leaders}

What’s on the to-do list?

For many tax leaders, the level of public disclosure goes beyond what they are used to. It also opens organisations up to increased scrutiny – robust tax governance will be crucial to support your figures. You should be actively relooking at your tax systems to maintain confidence, so they are robust and agile enough to meet current and future tax transparency demands.
With that in mind, what needs to be at the top of your tax transparency to-do list?

^1.^{Align with your ESG agenda}

Ensure you’re familiar with your organisation’s wider ESG reporting. Some of the frameworks will have specific tax requirements that need to be met.

Your tax strategy and disclosures will need to reflect your organisation’s broader ESG story. What will that mean for your voluntary disclosures?

^2.^{Map the data you’ll need}

New reporting means new data.

Where does the data you need sit – in which functions, and in which countries? How can you ensure that it’s in the right format and quality?

Being confident about the answers to these questions will ensure you have confidence in your data.

^3.^{Implement agile systems}

With both mandatory and voluntary reporting on the rise, having robust and agile systems to respond to the increasingly complex disclosure landscape is essential.

You’ll also need to articulate who is responsible for which data points and disclosures. Implementing a RACI will be critical to build a robust framework.

^4.^{Articulate your story}

Numbers alone aren’t enough. What is the context for your tax position, and how will you get that across in your disclosures?

Engagement from senior stakeholders will also be critical. Ensure they understand the narrative behind the numbers.

^5.^{Keep an eye on the horizon}

The tax transparency landscape is moving at speed. With both additional and increased tax reporting and broader sustainability regulations coming down the line, you’ll want to understand – and prepare for – upcoming reporting requirements.

Knowing up-front what is needed will give you the time to implement the right systems and processes to comply from day one.