New environment demands greater transparency about tax affairs

Seven in every ten CEOs are still concerned about the increasing tax burden borne by their businesses – some 15 percentage points higher than the levels of anxiety seen in 2012, according to PwC’s 19th Annual Global CEO Survey.

The survey reveals that in the coming years CEOs across the world will find themselves in a new environment that demands far greater transparency about their tax affairs.

Recently, corporate taxation has become a matter of significant public interest. This is no surprise because many countries are facing enormous debt burdens and the priority for many governments has been to ensure that their tax systems generate the revenue they expect.

People are more concerned during difficult economic times about where tax revenue is coming from and that everyone, particularly those with the most, are paying their fair share,” the survey noted.

Rick Stamm, vice chairman, global tax, PwC said: “The world of tax is in no way immune to the transformative power of technology. Taxing authorities are harnessing technology not just to collect routine tax data through e-filing but in more significant ways, and corporate tax departments are investing in technology to improve compliance and efficiency. Technology – and social media particularly – is forcing both businesses and taxing authorities to engage and respond to questions around tax in a clear and accessible way, and to a much wider base of stakeholders than before.

“As CEOs look to meet the expectations of their stakeholders, a clear explanation of their contribution to society through the taxes that they pay will be critical. Providing proper context for all of their social, environmental, tax and economic impacts, business can help stakeholders understand the total impact of their tax strategy and contribution as an element of their total contribution to society.”

As taxing authorities turn their attention to the practical implementation of the OECD’s Base Erosion and Profit Shifting (BEPS) recommendations, many companies are facing a future where much more detailed tax and financial information is required of them.

Iheanyi Nwachukwu