All material subject to strictly enforced copyright laws. © 2022 ITR is part of the Euromoney Institutional Investor PLC group.

Treading water


Achieving transparency, whether as a taxpayer or tax authority, can often feel like you are treading water.

Achieving transparency, whether as a taxpayer or tax authority, can often feel like you are treading water. When it feels like you are getting closer to the shore, another wave of proposals, each with new rules and threats of controversy pushing you out into open water.

Internal procedures, data gathering, analytics, and clear policies all play a key part in achieving transparency. However, transparency initiatives are vulnerable to subjective judgements (page six).

Nevertheless, companies are often accused of pursuing the lowest effective tax rate possible. Many companies are now focused on educating tax authorities, stakeholders and the public to explain how they pay their taxes (page 74). Meanwhile, The B Team has found a framework that it believes could work for many large businesses (page 20).

Many reading this will argue that this is a problem for taxpayers as they aim to comply and protect their business reputation. However, tax authorities are dealing with the same challenges.

Country-by-country reporting (CbCR) and the automatic exchange of information (AEOI) are just two transparency initiatives where it is not entirely clear how governments are analysing and using the data. There are still deep trust issues partly because of this. Furthermore, if tax authorities are viewed as more aggressive and less trustworthy, taxpayers will be ever-more cautious about how open they are with their tax affairs.

It's a vicious circle between taxpayer and tax authorities, but what makes it tougher are tax justice networks fighting for more transparency and fairness. Despite the CbCR and AEOI initiatives being introduced, it's not enough for some non-governmental organisations (NGOs) and they continue to push the debate further (page 40). These networks, while performing an essential service, are not letting taxpayers and governments rest.

No matter what policies are put in place, it seems the water beneath our feet is always getting deeper as NGOs push the boundaries. Many will be trying to stay afloat and avoid getting lost at sea.

Anjana Haines
Managing editor, International Tax Review

More from across our site

This week European Commission officials consider legal loopholes to secure minimum corporate taxation, while Cisco and Microsoft shareholders call for tax transparency.
The fast-food company’s tax settlement with French authorities strengthens the need for businesses to review their TP arrangements and documentation.
The full ALP model will be adopted through a new TP regime, which is set to boost the country’s investments and tax certainty.
Tax professionals have called on the UK government to reconsider its online sales tax as it would affect the economy at the worst time.
Tax professionals have called on companies to act urgently to meet e-invoicing compliance targets as the EU plans to ramp up digitisation.
In the wake of India’s ambitious 25-year plan for economic growth, ITR has partnered with leading tax commentators to discuss what the future will look like for India and for the rest of the world.
But experts cast doubt on HMRC's data and believe COVID-19 would have increased the revenue shortfall.
EY’s plan to separate its auditing and consulting businesses might lessen scrutiny from global regulators, but the brand identity could suffer, say sources.
Multinationals are asking world leaders to put a scale on carbon pricing to tackle climate change at the 48th G7 summit in Germany, from June 26 to 28.
The state secretary told the French press that the country continues to oppose pillar two’s global minimum tax rate following an Ecofin meeting last week.
We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree