There has been a step change in the tax disclosures made by the UK’s largest listed companies, a new PwC report published today shows.
Almost half (49) of the FTSE 100 now disclose information on their overall approach to tax, a 50% increase on 32 companies that explained their approach the previous year.
Andrew Packman, tax partner at PwC, said: “It’s evident that companies are sharing more information about their tax affairs. Increased interest in tax and a desire to build trust with customers, employees and investors are undoubtedly encouraging voluntary tax disclosures.
“Whether we will soon see the majority of FTSE firms disclosing similar levels of detail on tax is uncertain. Tax transparency varies from industry to industry and some investors simply don’t demand more information or are mindful of the costs involved. But all businesses should be considering these issues at board level and have an agreed approach to tax transparency. Interest in tax is not going to go away.”
As well as information on tax policy, the report shows that companies are making disclosures about the range of taxes they pay. With corporation tax no longer the largest tax borne by businesses, 24 companies are now reporting details of other taxes borne and collected besides corporation tax, compared with 19 the previous year.
Andrew Packman, tax partner at PwC, said: “Companies are starting to see the benefits of voluntary disclosure of all taxes. It is total taxes that governments are interested in to fund public spending, not corporation tax alone, so it makes sense to provide the full picture.”
The report also highlights that geographical reporting is now on the agenda of the UK’s biggest companies, with a number of mandatory requirements already in place. Some 22 FTSE100 firms (up from 17 the previous year) now provide some breakdown of taxes around the world, either by region or by country. Eight of these firms are extractives companies, who experience particular interest in where they pay tax, and four are banks, who will soon have to communicate detailed figures as part of the CRDIV transparency requirements.
“While we are seeing more firms reporting taxes around the world, it’s important to bear in mind that some companies operate almost entirely within the UK,” said Packman. “A business may choose not to give a global breakdown of taxes because it would be meaningless.”