Once considered marginal tax transparency is becoming a new norm in CSR reporting. The law landscape and companies' attitudes are rapidly changing towards greater tax transparency. Revelations such as the Panama and Paradise Papers and demands from citizens, the media and consumers put pressure on the companies to disclose more quality information in relation to tax. In our book "Multinational Enterprises and Transparent Tax Reporting" we track historical development, provide examples of voluntary tax transparency in companies’ reporting and discuss quality criteria of tax transparency. Furthermore, we investigate the whole phenomenon of tax transparency from diverse theoretical angles.
In this book, tax transparency is placed in a historical context and possible drivers and hindering factors to tax transparency are investigated. Tax transparency is defined as companies’ voluntary disclosure of numerical tax data (e.g. taxes paid by country) and other tax-related information (e.g. tax policies). It is set apart from tax avoidance and tax evasion to clarify the often-blurred concepts.
Tax transparency is discussed in the light of socio-economic theories (stakeholder, legitimacy, institutional theory and reputation risk management), as well as economic theories (agency theory, signalling, proprietary costs) and information overload theory. The book provides examples of tax transparency development of the largest multinational enterprises in five countries (France, Germany, UK, Finland and USA) in six years, 2012–2017, a period featuring increased media coverage of tax matters and legislative movement in the OECD and the European Union. The future of tax transparency is discussed in light of quality characteristics, assurance of information and potential use of artificial intelligence.
Companies’ managers and tax and CSR specialists benefit from the book by gaining insight into how to design transparent, high-quality tax reporting. Assurance professionals can use information about the quality criteria of tax transparency. Regulators can track historical development and see examples of voluntary tax transparency in companies’ reporting. Scholars and students obtain theoretical framework for analysing the tax transparency phenomenon and the ability to distinguish between the concepts of tax transparency, planning, avoidance and evasion.
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