Shedding light on transparency: are you risking your tax agenda?

Publishing tax information on a CbC basis, and making tax disclosures under CRSD, is likely to mean putting more information into the public domain than ever before. That will intensify the spotlight on your tax arrangements, and the risk of misinterpretation by stakeholders.

Internal alignment on your approach will therefore be essential.

Reach out as early as possible to the relevant stakeholders. These will include your board, sustainability team, investor relations, legal team, audit committee and public affairs team.

Your board and audit committee will need to approve what you’re communicating to the outside world. And your board and non-execs may want to benchmark your messaging against your peers.

You’ll want to ensure people understand the story your tax data tells, and the narrative you wish to communicate about it. And you must make sure that this story reflects your group’s reality.

There’s a choice to make here about how transparent you are.

Sticking to the minimum requirements is unlikely to meet your external stakeholders’ demands. At the other end of the scale, aiming for full tax transparency will be resource-intensive, and will increase scrutiny. But it will reduce the risk of misinterpretation.

You’ll need to weigh up these benefits and risks to find the right level of tax transparency for your business.

If you’re in scope, then start thinking about what you’ll need to do to be ready for CbC reporting. What are the rules in each country where you operate? What’s the deadline for compliance, which varies by jurisdiction?

Keep in mind that there are commonalities and differences between the various jurisdictions, which need to be worked through.