GRI publishes draft standard for greater tax transparency
The Global Reporting Initiative (GRI) has published a draft standard for public comment aimed at promoting greater transparency on companies’ approach to taxes.
The Global Sustainability Standards Board (GSSB), GRI’ independent standard setting board, started the project following scandals such as the Panama and Paradise Papers which have led to greater demand from investors, civil society, media, and governments for more information on how companies approach taxes.
Global Sustainability Standards Board chair Judy Kuszewski said: “Tax revenues and their application are essential to society’s ability to deliver on the SDGs. Likewise, tax transparency promotes trust and credibility in the taxation system and in the tax practices of companies.
“It enables stakeholders to make informed judgments about whether a company’s position on tax and payments to governments reflects society’s priorities and creates a reliable basis for decision-making.”
A recent study by RobecoSAM, an investment company with a specific focus on sustainability investment, indicated that only 17% out of 830 companies surveyed were reporting publicly on tax payments at a country level, and most of these were only operating in a single country.
This number is anticipated to increase significantly. In a recent OECD Base Erosion and Profit Shifting (BEPS) survey by Deloitte, targeting tax and finance managers and executives from multinational companies in 38 countries, 80% of respondents said they expect public country-by-country reporting to be adopted globally in the next few years.
GRI’s proposed tax standard aims to take a step towards enabling such reporting by setting out common, well defined disclosures related to tax strategy, governance, control, risk, and stakeholder engagement, as well as country-by-country reporting of income, tax, and business activities.
Kuszewski added: “The multi-stakeholder approach led by GRI’s independent Global Sustainability Standards Board allows a consensus position on transparency to be developed through the collaboration of all relevant stakeholder groups, exclusively in the public interest.
“This approach guarantees a globally acceptable standard that enables vital societal dialogue to address global sustainability challenges. We invite all interested stakeholders to engage during the upcoming public comment.”
The draft tax and payments to governments standard is open for public comment through 15 March 2019.