Rise in FTSE 100 companies disclosing UK tax information
Demands for greater transparency from business about their tax affairs have prompted more than half of all FTSE 100 companies to disclose information about their approach to taxation, compared with less than a third two years ago, reports the Financial Times.
The rise in disclosures is a sign of the increased pressure on companies to give more information to investors and the public after the angry reaction to aggressive tax planning.
PwC, the professional services firm, said: “We see this move towards increased tax transparency as part of a trend which we expect to continue in 2015.” The findings are based on PwC’s analysis of annual reports, corporate websites and other social responsibility reports for financial years ending between January and December 2014.
The number of companies providing information about their general approach to taxation rose from 32 in 2012 to 49 in 2013, and has now reached 56. The information provided included comments on matters such as the openness of their relationships with tax authorities, their willingness to undertake aggressive tax planning and whether they had achieved a “low-risk” tax status from HM Revenue & Customs.
However, only a relatively small number — one-quarter — of FTSE 100 companies provided any breakdown of their taxes around the world, up by just three over the past year. The limited number of “country-by-country” disclosures — information on where companies paid tax — stems from a reluctance from some groups to put such information in the public domain, while others have not yet collected it.
Regardless of whether they make voluntary disclosures, multinationals will be forced by law to compile data for tax authorities showing where they earn their profits and pay their taxes, under the global crackdown on tax avoidance known as the “base erosion and profit shifting” (BEPS) initiative.
The details of how these new rules — expected to provide governments with a crucial weapon in the crackdown on avoidance — will be released on Monday by the Paris-based OECD.
PwC said the small increase in the number of companies making public country-by-country disclosures was not surprising, as many FTSE 100 companies were collecting the data required by the BEPS initiative for the first time for 2014 year-ends. “This would have allowed companies to assess their position internally while considering whether, and how, to make these disclosures public in future years.”
The CBI employers’ group, has opposed making tax data public, saying it “risks reducing public understanding of the tax debate by swamping people in highly complex data with no context”. But many tax experts expect companies with a “good” story to tell to publish tax information voluntarily.
PwC said that of the 25 companies that reported country-by-country information, eight were in the extractive industries and four were banks, which are already subject to mandatory reporting regimes.
