New paper by KPMG Global Responsible Tax Project casts a light on tax transparency explaining multinational reporting obligations

Highlights include:
EU public CbCR reporting obligations explained
An overview of the current and incoming mandatory and voluntary tax disclosures
Meaningful tax data: quality and understanding v quantity
The importance of a supporting narrative to build trust for good disclosure and stakeholder engagement

London, England July 18, KPMG Global Responsible Tax Project and Jericho Chambers published ‘Public Tax Reporting: Understanding complexity: making disclosure meaningful,’ a paper based on a series of roundtable discussions with industry leaders, including investors, rating agencies, ESG professionals and tax directors. The paper explores the complexities of tax transparency and the intricate concepts of tax reporting which have recently become more significant due to heightened public scrutiny and the demand for corporate accountability.

Following the introduction of public Country-by-Country Reporting (CbCR) in the European Union (EU) – as well as in Australia – both of which will apply to calendar year end companies from 1.1.25 many multinational corporations will now be subject to new public reporting requirements. The KPMG led discussions delved into stakeholders needs from public tax reporting, the logic behind these needs, the obstacles to providing such information and the best practices for communicating it effectively with the goal being to move from minimal disclosure to full transparency thereby fostering trust.

Tax reporting is crucial for establishing trust between business, civil society, policymakers and opinion formers. This trust has been compromised over many years, and it is unrealistic to expect that tax reporting can restore it solely through an increasing number of metrics. Our roundtable discussions showed that tax reporting is a proxy for trust. The figures must be as accurate and relevant as possible, but it is the quality of the narrative and dialogue that really builds trust.

Chris Morgan

Head of Global Responsible Tax Project, KPMG International

Different regions around the world are at different stages of the journey and there are varying types of transparency codes, some voluntary, some mandatory, some industry specific, some directly tax related and some implied through ESG reporting. After the EU Directive was incorporated into national laws, most of the EU member states have issued legislation, with most member states introducing penalties for non-compliance.

Multinationals are now confronted with a paradox: while some stakeholders demand more data before trusting what a company says about its tax position, complex tax data can create misunderstanding that can lead to debate over its meaning and questions about its accuracy, thereby actually reducing trust.

The future of meaningful tax reporting hinges on comprehending the available information and ensuring it is suitable for the audience. Yet, complexity cannot be eliminated. Only through dialogue over these complexities can meaningful trust be built as the more intricate the greater the likelihood of increasing confusion and mistrust.

Grant Wardell-Johnson

Head of Global Tax Policy Group, KPMG International

The EU public CbCR reporting obligations stem from the OECD BEPS Action Plan 13, which when properly implemented could be the pivotal first step of an organization’s tax transparency journey.The EU public CbCR reporting obligations stem from the OECD BEPS Action Plan 13, which when properly implemented could be the pivotal first step of an organization’s tax transparency journey.

Although initially perceived as a compliance burden for businesses, it has transformed into significant public transparency, first voluntarily and now under compulsory regulations. The good news is that help is readily available as reporting requirements can be facilitated by suitable systems and tooling solutions.

Loek Helderman

KPMG Global ESG Tax & Legal Lead

Access the paper: Public Tax Reporting: Understanding complexity; making disclosure meaningful

For media queries, please contact:

Daniel Caines,
Senior Manager, Global External Communications, KPMG International

T: +44 7732400262
E: Daniel.Caines@kpmg.co.uk

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