The value of public tax transparency
The general perception that large corporations enjoy an oversized slice of the globalisation pie has triggered close media and political scrutiny of the tax affairs of multinationals. The result is that we’ve embarked on a journey to a significantly more scrutinised world of tax. An increasingly important challenge is managing tax-related reputational risks. Public tax transparency could play a significant part in this. In an increasingly transparent tax environment, companies may want to communicate their positive financial impact on the societies they operate in.
Is it in your interests to be publicly tax transparent?
Act now and set a good example, which may help shape the way potentially mandatory public tax disclosures are designed in the future.
How important is public tax transparency?
We’ve identified five areas where it will most likely be in your company’s direct interests, plus a sixth area where you might indirectly profit from the process of becoming publicly tax transparent.
(1) Corporate sustainability; actively building public and stakeholder trust, (2) Institutional investors; meeting their expectations, (3) Media; regaining control of your reputation, (4) Tax administrations; improving relationships, (5) Lawmakers; actively participating in the design of new transparency standards, (6) Business strategy; gaining new insights.
What should I do now?
Your very first step should be to decide how to respond to an increasingly transparent tax environment. The second step should be to adopt a position and start to develop a strategic response. Finding an approach to public tax transparency may be part of it.
