Governance And Tax Transparency Should Top CEO And Board Member To-Dos

For a few years now the global tax system has been in a period of significant change. One feature of this, among many, has been increased tax transparency, in whose name discussion around fair taxation has heated up and the term "responsible tax" has emerged. Customers, investors, and employees certainly expect more from businesses than in the past when it comes to their tax practices.

Hardening out of the mist of these discussions is the conclusion that the tax policy of every multinational group will, long-term, likely have to be made public in one way or another. This move has already started, with several recent initiatives emerging that shift companies' obligations away from reporting to tax authorities and towards reporting to the public, either at local or international levels.

Furthermore, the EU commission is currently discussing the conditions under which country-by-country reporting requirements (which already exist in the EU and in some other countries further to the BEPS work and the 2016 Directive) would become public.

The UK has recently enacted rules that require certain big companies to publish their tax strategies on their websites. The publication must cover a certain number of areas, including the UK group's approach to risk management, governance arrangements in relation to UK taxation, and the group's attitude towards tax planning. The policy objective of this new rule is to increase the transparency of the business's approach to tax for all stakeholders: tax authorities, shareholders, and consumers. But the rule also aims to ensure that board members will control the company's tax strategy and embed it in existing corporate governance processes.

The UK may qualify as a first-mover on this front, but it is likely...