Increasingly, there is a clear expectation both by internal governing bodies as well as external stakeholders that a company’s tax strategy is sustainable, leads to a “fair” distribution of taxes and can be explained to non-tax specialists.
The GRI Tax Standard again provides a tool for increased tax transparency and even goes as far as making certain CbCR information available to the public. As a result, while sustainability reporting is principally voluntary, if a company wants to continue obtaining the respective adherence level or assurance for their sustainability reporting under the GRI standard and/or obtain good results in sustainability rankings, they will have to also address the GRI Tax Standard.
Taking this one step further, as “Tax Transparency” is also relevant in certain rating methodologies relevant for investors (e.g. in the MSCI ESG ratings methodology) the content and quality of such information in sustainability reports could also increasingly become relevant in investment decisions.
As such, the introduction of this standard will likely again increase both the internal and external pressures with respect to tax transparency e.g. as competitors increasingly publish such reports and as the tax function now has to contribute to existing sustainability reports.