COVID-19 has increased the focus on tax revenues, spotlighting government and public awareness of tax planning structures. Environmental, social and governance (ESG) initiatives are helping investors identify sustainable investments, including through the lens of tax policy. Stakeholders, through public disclosure, board pressure and shareholder activism, are tasking C-suites and managers to pursue a responsible tax policy. Tax transparency is about trust. Some companies have published their tax policies and prepare public annual tax reports outlining their contributions to direct and indirect taxes. The structure of these tax reports varies from organization to organization. There is limited consistency in disclosure frameworks. This is changing.

There are now a number of tax transparency reporting standards and frameworks, both mandatory and voluntary, that have been implemented or are proposed to be implemented. Initially these focused on the financial and extractives sectors, but other proposals and initiatives are applicable to all industries and sectors. These include: Action 13 of the OECD’s BEPS (Base Erosion and Profit Shifting) Action Plan regarding country-by-country (CbC) reporting and transfer pricing documentation; EU public CbC reporting (now formally adopted); Capital Requirements Directive IV (CRD IV); EU Accounting Directive: Chapter 10; US Proposal on Public Country-by-Country Reporting and Dodd Frank Act: Section 1504; Extractive Industries Transparency Initiative (EITI) and the Global Reporting Initiative (GRI) Standard 207.

This article explores the global momentum for increased tax transparency, what is GRI 207 and some of the practical considerations in its application. We will be releasing a second article which discusses how reporting under the GRI 207 standard interacts with both OECD CbC reporting between companies and tax authorities and the new EU public CbC reporting.

Overview of GRI 207

The GRI is an independent, international organization that provides businesses and other organizations with the global common language to communicate their impacts and take responsibility for those impacts. GRI is the most followed standard for sustainability reporting globally.1

GRI 207 was developed in recognition of the vital role that tax contributions have on sustainable development, and in response to widespread stakeholder demands for tax transparency. It sets expectations for disclosure of tax payments on a country-by-country basis, alongside tax strategy and governance. GRI 207 is designed to help an organization understand and communicate its management approach in relation to tax, and to report its revenue, tax, and business activities on a country-by-country basis.

When does it apply?

GRI 207 is effective for reports or other materials published on or after 1 January 2021, although early adoption was encouraged.

Is it mandatory or voluntary?

The standard is voluntary for most but ‘virtually mandatory’ for some. This is because of requirements imposed on members by some international organizations such as the International Council on Mining and Metals and their ‘performance expectations’ of members to comply with the GRI standards. Therefore, the minerals industry has mainly produced detailed disclosures in relation to the GRI standards.

Who does it affect?

Once a company claims to report in accordance with GRI standards, they are required to make disclosures on all their material topics. Material topics are topics that reflect the organization’s significant economic, environmental, and social impacts; or that substantively influence the assessments and decisions of stakeholders.2 From a sustainability perspective, tax is always expected to be material regardless of the tax footprint of a group, as taxes are considered to be important to stakeholders. GRI 207 can be used by an organization of any size, type, sector or geographic location that wants to report on its impacts related tax and because the standard is freely available, even those who do not report under other GRI topics but wish to make some tax disclosures can use GRI 207 as a guide.

What disclosures are required under GRI 207?

GRI 207 includes disclosures on the management approach and topic-specific disclosures including:

Management approach disclosures (narrative explanations)

207-1 Approach to tax


This includes a description of a tax strategy, the governance body and any formal review and approval process of the tax strategy (and the frequency); approach to regulatory compliance and how the approach to tax links to an organization’s sustainable development strategies.


207-1 Tax governance, control and risk management


This includes a description on the tax governance and control framework and the governance body accountable for compliance with the tax strategy, how the approach to tax is embedded within the organization, approach to tax risks, how compliance with the tax governance and control framework is evaluated; the mechanisms for reporting unethical and unlawful behaviour; and assurance process for disclosures on tax.



207-3 Stakeholder engagement and management of concerns related to tax


This includes a description of an organization’s approach to stakeholder engagement and management of stakeholder concerns related to tax, including: the approach to engagement with tax authorities, public policy advocacy on tax, and for collecting and considering the views and concerns of stakeholders, including external stakeholders.


Topic-specific disclosures (quantitative and narrative explanations)

207-4 Country-by-country reporting


This is largely a quantitative exercise of country-by-country reporting of information similar to the OECD CbC reporting but with some important differences.

Some practical considerations in applying GRI 207

  • In applying GRI 207-1 to 3, companies may be able to leverage from disclosures made under mandatory and voluntary transparency frameworks which they already comply with. Whilst most companies would have a tax strategy in place with statements around their tax governance, control and risk management, details around how tax is linked to sustainable development strategies and public disclosures on the process of collecting views and concerns from stakeholders and how other stakeholder engagement on tax matters is managed may require further refinement.
  • GRI 207-4 is the disclosure that requires the most work and resources given it requires quantitative disclosures. Depending on how large the organizations’ global operations are, a separate report may be required. There are similarities between the data used for OECD CbC reporting and for GRI 207-4, which can help to save on compliance costs, but there are some key differences that require a gap analysis be performed. GRI’s disclosures are more extensive than OECD CbC reporting requirements. Some of these key differences include the requirement to use consolidated numbers at each country level under the GRI whereas the OECD CbC uses aggregated figures; the requirement, on a CbC basis, to explain differences between ‘corporate income tax accrued’ (which excludes deferred corporate income taxes and provisions for uncertain tax positions) and the ‘tax due if the statutory tax rate is applied to profit/loss before tax’.
  • There are undefined terms in GRI 207-4 such as “intra-group transaction” and “tangible asset”. A pragmatic approach would be to adopt the same definitional approach and basis of preparation (to the extent there is a lack of guidance) as the OECD CbC reporting or accounting standards. This, in so far as is possible, can help ensure there is a consistency in approach.

The tax function can significantly contribute to a company’s ESG journey. The key is to strive to ensure your tax governance is fit for the current business environment and having a clear policy towards tax transparency. Relevant considerations include the cost and effort to produce reliable data and as many large multinational groups have learned, the extraction and aggregation of tax data and aiming to ensure the completeness, accuracy and consistency have been significant undertakings. Traditional accounting systems were not designed to collect and report tax data. To the extent systems have been developed to produce OECD CbC reports, organizations should leverage from these processes and address any gaps to help meet the requirements of GRI 207.

Fortunately, technology solutions which help companies coordinate and extract their data so they can report under their chosen standard or framework continue to emerge. They can help reduce the burden when performing analysis which ultimately helps companies arrive at more comprehensive and relevant reporting.

KPMG Tax Impact Reporting

KPMG Tax Impact Reporting can assist in understanding and progressing tax transparency within your business, helping to inspire both confidence and support from investors, customers and regulators. Through this service offering, KPMG professionals from around the world can help your tax department inform stakeholders of your business’s approach to tax, use data-driven methodologies to help accurately compile information on your global tax footprint, provide guidance for compliance with tax transparency standards and changes, and use leading technology solutions to support your business on its tax transparency journey.

Stay tuned for the next article: ESG and tax: Current trends on global tax transparency - an in-depth comparison of CbC reporting



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