Not just about data: narratives integral to public tax disclosures, experts say

Tax experts have said that Australia’s recently introduced public country-by-country (CbC) reporting regime has introduced fresh reputational risks for large firms and emphasised the importance of accompanying complex data with coherent narratives.

At a 16 April University of Sydney industry event, tax advocates discussed the challenges and benefits associated with Australia’s new public CbC regime.

From the financial year starting 1 July 2024, the ATO has enforced public CbC reporting requirements for large multinationals to combat multinational tax avoidance and boost transparency into companies’ global tax affairs.

During a panel session, Paul Suppree, assistant director at the Corporate Tax Association, said the conversations surrounding tax risk management had evolved significantly since he first entered the space in 1983.

“I can remember when I first got involved with risk, talking to other tax managers to say I'm a risk manager, and they didn't quite understand what I meant,” he recalled.

“But I think these days, most heads of tax will consider themselves risk managers. Things have changed, unquestionably, in the way in which tax is looked at within large corporates.”

Suppree said that tax was now broadly considered part of companies’ environmental, social and governance (ESG) frameworks. However, given the complexity of tax law, he said that public disclosures did create challenges for businesses in communicating certain outcomes to the general public.

In some cases, corporations could see lower-than-expected tax bills after taking advantage of government initiatives aimed at achieving other policy objectives, such as the R&D tax incentive. In other cases, businesses carried forward tax losses from prior years.

While some corporations raised concerns about the reputational risks stemming from public CbC reporting, Greg Yates, senior ratings manager at the Fair Tax Foundation, said the additional transparency could bring reputational benefits for some businesses.

“Businesses tend to accompany their data with a narrative … putting that data and the numbers into context for stakeholders, telling their story, instead of allowing it [to] be told for them by journalists,” he said.

“So we think that embracing public country-by-country reporting can be a really practical element of a responsible tax strategy and a way to build trust and strengthen social licence to operate.”

Yates added that Australia’s public CbC reporting rules were “world-leading” and should be praised.

“2026 is going to be a landmark year for corporate tax transparency around the globe, and businesses can embrace public country-by-country reporting, but think about accompanying data with a narrative to tell their own story.”