How business delivers tax strategically

In our seventh edition of trends in tax transparency, we look at how tax is becoming a key sustainability issue for many organisations. We're seeing an increased interest from Environmental, Social and Governance (ESG) investors in the tax affairs of businesses and anticipate the level of scrutiny will only intensify, as a consequence of COVID-19.

Beyond legal requirements, an organisation’s tax strategy must be intrinsically linked to the commercial and overall strategic objectives of the business.

A Tax function’s ability to deliver value depends on how well it’s able to adjust to today’s ever evolving regulatory changes, while supporting the company’s business strategy. Too many corporate Tax functions are struggling to address operational ineffectiveness, or may have been impacted by a recent merger or acquisition, and senior executives are taking notice.

A key challenge for companies in the current environment is to consider how best to respond to a landscape which continues to evolve.

If your organisation is already reporting under the Global Sustainability Reporting standards, or you are looking to develop your voluntary tax disclosures, you should be aware that GRI 207: Tax was published on 5 December 2019. To remain GRI compliant, you need to follow the new tax standard.

The sixth edition of ‘Trends in Tax Transparency’, reviewing tax disclosures in the FTSE100 (June 2019: a review of the FTSE100 for 2018 year ends), reveals how the tax transparency debate is evolving. Large companies operating in the UK must now make a public statement of their approach to tax and a private disclosure to tax authorities of their tax payments on a country-by-country basis. But can this increased disclosure help to rebuild the trust in big business that has been lost in recent years?