Momentum gathering behind public country-by-country tax reporting

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 million 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’.

• In the United States, a bill on CBCR was introduced in the House of Representatives. The Disclosure of Tax Havens and Offshoring Act would require publication of tax data by US companies, broken down by jurisdiction.

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.

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.