EY’s publication discussing tax reputation readiness and transparency provides suggestions for increasing readiness with good processes, robust documentation/audit trail and class-leading data management. The publication is very timely, noting the recent European Parliament’s unanimous vote for public reporting of country-by-country (CbC) and beneficial ownership information.
- More than 60% of companies believe that engaging with the media is a “no-win” situation.
- Excellent timeline/events of transparency initiatives commencing from 2003 until present, and future, state.
- 65% of respondents have developed a more structured approach to managing their public tax profile in the previous 2 years.
- 94% of respondents expect increased growth in global disclosure and transparency initiatives.
- “Business can do more and be more proactive to prepare for new reporting obligations and, as one proposed step, either proactively or defensively, Whatever choices a business makes, developing and sustaining the ability to source accurate data, in the right format and in a timely manner will be a critical factor for all large businesses in the years ahead.”
- Multiple transparency initiatives are succinctly depicted in a table on page 9.
- Transparency will be the new normal.
- Quality information requires quality data.
- Transparency readiness is a significant and underestimated need of companies.
- Transparency readiness assessment questions are posed for consideration.
- Detecting risk anomalies in the data is an important consideration; thoughtful questions are posed for review.
- Companies that can quickly and clearly explain their tax transactions and strategies are best positioned to manage reputation risks.
- Six proactive actions to consider:
- Actively monitor the changing landscape
- Assess readiness, and desire, to respond
- Enhance communication with internal and external stakeholders
- Develop steps to prepare the total tax picture
- Decide with whom the company wishes to communicate
- Embed reputation risk thinking into core business strategy
This survey provides an excellent approach and proactive roadmap in addressing the challenges, readiness and complex actions required to develop transparency readiness and engage reputation risk proactively. Accordingly, this should be required reading for all MNE’s as a primer and self test mechanism to address the new era of international tax transparency and potential angles of attack for reputation risk.