Tax Reporting and Transparency Trends has been saved
Perspectives
Tax Reporting and Transparency Trends
A study of FY22/23 year ends for the FTSE350
Tax is a central part of our public lives, funding vital services. As businesses increasingly focus on their purpose and respond to Environmental, Societal and Governance (ESG) considerations, it is right that tax reporting and transparency is a key consideration.
In our latest report we have examined trends across a sample of the FTSE350 to see how businesses are responding to the transparency and ESG reporting demands from authorities, shareholders and stakeholders.
At a glance
- 58% of the companies we reviewed included no disclosures on UTPs or tax-related contingent liabilities in their financial statements
- Of those companies that did include disclosure, 71% quantified their tax provisions
- 42% of companies in our sample provide detail on how they identify, manage and internally report their tax risks
- 71% of groups publish some information on the taxes they pay, with 23% breaking this down further by country and/or tax
- Tax and transparency is a key matter in the independent external auditor reports of 11 groups within our sample.
Reporting in a complex landscape
The disclosure of tax in annual reports and transparency statements is an increasing area of focus for companies and their stakeholders. There is growing complexity in the tax system - with initiatives such as the OECD Inclusive Framework’s Pillar Two - at the same time as a heightened expectations around disclosure and transparency, linked to the broader Environmental, Societal and Governance (ESG) agenda.
With these factors in mind, we reviewed the reporting trends of 52 FTSE350 companies across industry groups across two related dimensions: tax reporting and tax transparency.
From a tax reporting perspective we focused on some of the most judgemental and complex areas of tax reporting in IAS 12, including:
- Uncertain tax positions
- Discussion of future tax rate drivers or risks
- Tax estimates and judgements
- Deferred tax asset recognition
Our analysis of tax transparency statements we considered five key themes:
- Context – setting the scene
- Approach – your tax fundamentals
- Key matters – What shapes your tax profile
- Data – the taxes you pay (and where)
- Assurance – giving confidence in your commitments
You can access our full findings here.
Key themes