Well-known international consultants, PricewaterhouseCoopers (PwC), in a survey of India’s top business executives of big firms has regretted that as many as 75% of the respondents said their company does not have “a publishable tax transparency report (TTR)”, indicating “a gap in tax transparency-related practices.”
Further regretting that only 23% of companies use Global Reporting Initiative (GRI) or other international standardised tax transparency related practices, the report, a copy of which has been forwarded to Counterview, thinks, “The survey shows there is room for improvement in tax transparency-related practices, as a significant number of companies are not utilising standardised frameworks for tax disclosure.”
The report, titled “Tax transparency in ESG: Insights into Indian businesses and their sustainable practices based on a PwC India survey”, says, “This finding highlights a lack of clear communication and transparency regarding tax practices, which can impact stakeholder trust and reputation.”
ESG stands for environmental, social and governance considerations, which, according to PwC “are not just about ‘doing good’, but are fundamental to any business in building reputation, reducing risks, and creating sustainable value for stakeholders.”
The report was released one day before Prime Minister Narendra Modi-promoted Vibrant Gujarat Global Investors' Summit, a biennial event for wooing national and international tycoons to heavily invest in his home state.
Based on insights shared by 250 senior executives across a variety of industries in India, 75% of the survey participants are from companies with more than 500 employees; 37% are from companies comprising 1,000 to 5,000 employees; 66% belong to listed entities in India; and 34% are from unlisted entities, including privately held businesses.
The report also rues, “TTR is currently a voluntary disclosure in India”, insisting, there is need to for a “policy push” in this regard, because “a TTR is a specially made document to communicate an organisation’s societal contribution by way of taxes, its commitment to responsible tax behaviour and a narrative on tax matters of importance to stakeholders.”
The report reveals, the TTR document is not being prepared by majority of companies despite the “47% of respondents say that tax transparency disclosures could improve a company’s reputation by portraying it as engaging in responsible tax behaviour”.
Further, “44% of respondents opine that tax transparency can increase a company’s ESG profile, score and credibility” and “34% of respondents believe that tax transparency is an opportunity to shape a positive narrative for a company.”
Internationally, the report states, tax transparency is fast becoming a norm. Thus, it says, “In recent years, various organisations, including the Sustainability Accounting Standards Board (SASB), the Organisation for Economic Co-operation and Development (OECD), the Task Force on Climate-related Financial Disclosures (TCFD), and the World Economic Forum (WEF), have emphasised the pivotal role of taxes within the broader framework of ESG.”
Pointing out that this has led to “Global Reporting Initiative (GRI)” for ensuring tax transparency, the report notes, “The OECD, through its BEPS initiative, calls upon companies to report their country-by-country tax information privately to tax authorities.”
It adds, “The International Business Council of the World Economic Forum (WEFIBC) has published a set of key metrics, which include reporting of taxes paid as a ‘core metric’ and the taxes collected and paid as a ‘recommended metric’ for stakeholders/ESG considerations.”
The report believes, this not only “highlights the growing importance of tax transparency in the context of ESG” but helps usher in “the Principle for Responsible Investment (PRI)”, which “encourages investors to advocate for fairer public policy on tax and integrate tax issues into their voting policies, strengthening the alignment between responsible investment practices and tax-related disclosures.”
Based on insights shared by 250 senior executives across a variety of industries in India, 75% of the survey participants are from companies with more than 500 employees; 37% are from companies comprising 1,000 to 5,000 employees; 66% belong to listed entities in India; and 34% are from unlisted entities, including privately held businesses.
The report also rues, “TTR is currently a voluntary disclosure in India”, insisting, there is need to for a “policy push” in this regard, because “a TTR is a specially made document to communicate an organisation’s societal contribution by way of taxes, its commitment to responsible tax behaviour and a narrative on tax matters of importance to stakeholders.”
The report reveals, the TTR document is not being prepared by majority of companies despite the “47% of respondents say that tax transparency disclosures could improve a company’s reputation by portraying it as engaging in responsible tax behaviour”.
Further, “44% of respondents opine that tax transparency can increase a company’s ESG profile, score and credibility” and “34% of respondents believe that tax transparency is an opportunity to shape a positive narrative for a company.”
Internationally, the report states, tax transparency is fast becoming a norm. Thus, it says, “In recent years, various organisations, including the Sustainability Accounting Standards Board (SASB), the Organisation for Economic Co-operation and Development (OECD), the Task Force on Climate-related Financial Disclosures (TCFD), and the World Economic Forum (WEF), have emphasised the pivotal role of taxes within the broader framework of ESG.”
Pointing out that this has led to “Global Reporting Initiative (GRI)” for ensuring tax transparency, the report notes, “The OECD, through its BEPS initiative, calls upon companies to report their country-by-country tax information privately to tax authorities.”
It adds, “The International Business Council of the World Economic Forum (WEFIBC) has published a set of key metrics, which include reporting of taxes paid as a ‘core metric’ and the taxes collected and paid as a ‘recommended metric’ for stakeholders/ESG considerations.”
The report believes, this not only “highlights the growing importance of tax transparency in the context of ESG” but helps usher in “the Principle for Responsible Investment (PRI)”, which “encourages investors to advocate for fairer public policy on tax and integrate tax issues into their voting policies, strengthening the alignment between responsible investment practices and tax-related disclosures.”
Only 23% of Indian companies use Global Reporting Initiative or other international standardised tax transparency related practices
Also, the report says, “The European Union (EU) public country-by-country reporting directive and the EU corporate sustainability reporting directive (CSRD) aim to promote transparency and accountability within businesses operating in the EU.”
“CSRD incorporates the use of GRI, which facilitates the reporting of tax-related information, further enhancing the comprehensive disclosure of financial and sustainability-related data. These rules are intended to ensure companies are held accountable to higher standards of disclosure and contribute to the EU’s larger objectives of sustainability and corporate responsibility.”
The Indian companies, suggests the report, comes nowhere near such international standards, with only 23% of companies adopted the GRI standard, underlining, “There’s a clear need then for more widespread alignment with international reporting frameworks/ standards to enhance stakeholder trust.”
About 75% Indian companies are reluctant for TTR, believes the report, despite the fact that majority of “three primary stakeholders in India” seek transparency: shareholders (76%), regulators (71%) and employees (50%). That 76% shareholders seek TTR suggests how keen they are about evaluating “long-term financial viability and risk associated with” their investment.
Refusal to be transparent about taxes stands in sharp contrast with the executives’ declared intentions. Thus, the report states, “50% respondents who have made a net-zero commitment”, of these “48% aim to achieve their goals by 2030, and are therefore poised to undertake decarbonisation measures at an accelerated pace”.
In fact, the report finds, “93% of respondents state that tax incentives – such as financial benefits and lowering economic barriers – can significantly promote adoption of ESG practices by businesses. Such benefits can incentivise businesses to adopt environment-friendly practices and promote investments in renewable technologies.”
They think that only through “incentives and policy interventions, governments can support businesses in achieving their decarbonisation commitments, addressing income inequality, and promoting diversity and inclusion...”
The Indian companies, suggests the report, comes nowhere near such international standards, with only 23% of companies adopted the GRI standard, underlining, “There’s a clear need then for more widespread alignment with international reporting frameworks/ standards to enhance stakeholder trust.”
About 75% Indian companies are reluctant for TTR, believes the report, despite the fact that majority of “three primary stakeholders in India” seek transparency: shareholders (76%), regulators (71%) and employees (50%). That 76% shareholders seek TTR suggests how keen they are about evaluating “long-term financial viability and risk associated with” their investment.
Refusal to be transparent about taxes stands in sharp contrast with the executives’ declared intentions. Thus, the report states, “50% respondents who have made a net-zero commitment”, of these “48% aim to achieve their goals by 2030, and are therefore poised to undertake decarbonisation measures at an accelerated pace”.
In fact, the report finds, “93% of respondents state that tax incentives – such as financial benefits and lowering economic barriers – can significantly promote adoption of ESG practices by businesses. Such benefits can incentivise businesses to adopt environment-friendly practices and promote investments in renewable technologies.”
They think that only through “incentives and policy interventions, governments can support businesses in achieving their decarbonisation commitments, addressing income inequality, and promoting diversity and inclusion...”
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