The Swedish Tax Agency proposes measures linking tax policies and sustainability
The Swedish Tax Agency proposes tax policies
The Swedish Tax Agency proposes tax policy requirements for state-owned companies and confirms tax as a sustainability issue.
On October 31, the Swedish Tax Agency (STA) published its report related to an assignment it received earlier this year from the Ministry of Finance to encourage the discussion on tax policies in company management. The assignment included describing the work the STA conducts at present in relation to the topic and to propose measures for how the work can be strengthened going forward.
We have closely followed the developments related to the discussions on tax policies and tax and sustainability. The STA’s report is broadly in line with what we expected. The STA indicates that it is looking to avoid formal requirements and is instead focusing on voluntary development and implementation of tax policies. To facilitate this, the STA is suggesting a number of supportive measures. This intention is further underlined by the clarification that the existence of a tax policy will not affect the STA’s risk assessment, or be used in the selection for tax audits. The STA indicates that supportive measures could include the development of models for tax policies with varying levels of ambition. Such models could also include guidance on implementation of policies, and internal or external audit are mentioned as examples to ensure sufficient follow-up.
It should, however, be noted that the STA suggests to introduce a requirement for state-owned companies and government agencies with ownership interests (e.g. state pension funds) to develop a tax policy. For government agencies with ownership interests, it is also suggested that they should act for their holdings to develop tax policies and make them public.
Interesting to note is also that the STA has clarified its view on what constitutes tax and sustainability (original quote in Swedish):
"That companies considers tax policies as a sustainability issue means for example taking risks associated with tax planning and tax structures into account. One risk could be that media attention negatively impacts the company's reputation. Also suppliers’ and other business partners’ management of taxes can have a negative impact on a company's reputation. Ensuring that tax policies is considered a sustainability issue can manifest itself through Board responsibility for the policy and through making the tax policy available to the public."
The report shows clearly that the STA considers tax as a sustainability issue and it is likely that focus on the topic of tax policies, the Board's responsibility on tax matters and transparency on taxation will continue to increase. What we expect in connection with this is that companies increasingly will get questions from different stakeholder groups on tax, including increased requirements for transparency. KPMG Sweden recently published a study on tax and sustainability (PDF 165KB, in Swedish) showing that only 14 percent of the largest listed Swedish companies currently have a public tax policy.
You are welcome to contact us if you are looking to develop a tax policy or would like to discuss how your company can be more transparent with regards to tax and sustainability.
Swedish Tax Agency’s report (PDF 235 KB, in Swedish)