GRI’s Tax Standard can address global requirements for transparency.Political momentum to require large companies to publicly provide country-by-country reporting (CBCR) on tax is increasing, on both sides of the Atlantic, with a series of significant developments last week:
- In a breakthrough moment, broad majority support was reached among EU ministers in a session of the Competitiveness Council
to finalise the CBCR directive – a proposed EU-wide law that would
ensure public reporting by multinationals with a turnover above €750 on
their taxes and profits by country.
- The UN High-Level Panel on International Financial Accountability, Transparency and Integrity (FACTI) published its final report, with a key recommendation to address tax transparency by requiring that ‘all private multinational entities publish accounting and financial information on a country-by-country basis’.
The new GRI Tax Standard
(GRI 207), which came into effect for reporting from 2021, is the first
and only globally applicable public reporting standard for tax
transparency. It sets expectations for disclosure of tax payments on a
CBCR basis, alongside tax strategy and governance.
Some multinational companies are already voluntarily implementing tax disclosure at the country level. Early adopters Philips, BP, Ørsted, Allianz and Newmont have all begun using GRI 207 for their tax reporting.
Tax is central to the economic and societal impacts that
companies have in the countries where they operate. Yet a lack of
transparency hinders scrutiny and the transition to public,
country-by-country reporting is long overdue. Regulations, in both
European and US markets, for mandatory tax disclosure by country would
be a game changer – with worldwide implications.
GRI’s Standard is the blueprint for making country-by-country tax
transparency a reality. Developed through an independent process that
addresses the needs of all stakeholders, GRI 207 is freely available now
to help any company deliver comprehensive and comparable tax
information.”
Eric Hespenheide, Chairman of GRI
GRI developed a topic Standard on Tax
in recognition of the vital role tax contributions have on sustainable
development, and in response to widespread stakeholder demands for tax
transparency. Developed by an independent, multi-stakeholder expert
group, GRI 207 was launched in December 2019 and is available for
download in nine languages.
The proposed EU CBCR directive
has stalled since 2017. With backing now reached among members of the
Competitiveness Council, the next step is for the Council to agree with
the European Parliament and Commission on the final text of the
directive in the coming months.
The UN FACTI Panel
remit was to review the international financial accountability and
transparency challenges impacting on the 2030 Agenda for sustainable
development. Their report provides 14 recommendations for governments,
of which tax transparency is one.
The 2020 edition of Carrots & Sticks,
the flagship resource from GRI on non-financial and sustainability
reporting regulations, revealed a global trend towards increasing
disclosure requirements and policies.
GRI
© GRI - Global Reporting Initiative
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