This article was first published in the July/August 2016 UK edition of Accounting and Business magazine.

There is a frenzy for transparency. Companies are owning up to the tons of sugar in every can of fizzy fruity froth or Bolognese sauce. Makers of chocolate confectionery are advising you to eat no more than a bar a week. CEOs of fashion brands that have taken an image hit are leaving their salary entitlements scattered on the cutting-room floor.  

And then there is tax. The complete UK tax legislation is a weighty affair, but tax itself is arcane. Even when mountains of paperwork detailing transactions are put into the public domain by a whistleblowing insider, it is very hard for an outsider to identify the incriminating ice-pick in that avalanche. The sort of transparency that genuinely expanded public knowledge and understanding would be hard to come by. Not because the information is not valuable, but because it might not be understood.

But it is politically important to be working on it. The EU, the Organisation for Economic Co-operation and Development (OECD), HMRC and the Australian Tax Office have all recently set such efforts in hand. So while what will be made available may not expand understanding, there is a severe reputational risk in non-disclosure.

Hence PwC’s third annual survey on trends in tax transparency. It provides a way out. Evidence of steady progress towards disclosure and transparency may alleviate some of the backlash. 

‘Ten years ago no one was talking about tax transparency,’ the survey begins. ‘Nobody would have predicted that, within the decade, there would be almost daily headlines on how much tax large companies pay, legislation to require companies to make a public disclosure of tax strategy, a review of tax reporting by a regulator (the Financial Reporting Council), and proposals from the EU to require companies to publicly report their profits, tax and other financial information on a country-by-country basis.’ 

Now, as PwC makes clear, it is up to companies to report all this, but also to make voluntary disclosures to set the basic stuff in context, to explain the debate into which they have all been pulled, and ‘to explain their tax affairs more fully’.

PwC looked at the types and range of tax disclosure FTSE 100 companies made for 2015 year-ends. Some just stuck a paragraph in the annual report. Others produced a separate document detailing tax disclosures. But the majority – and a growing majority – are detailing their approach to tax and risk management and the responsibility for the oversight of their tax affairs.


This can be dangerous stuff. How far can a company go before finding that public opinion tries to chop it off at the neck? And at what point, to continue the executioner’s imagery, does disclosure and transparency become a double-edged sword? The public debates around the Google, Starbucks and Amazon affairs have caused damage. 

Public outrage, sometimes entirely justified, but also sometimes based on fundamental misunderstandings of the nature of different taxes, raises the profile of the transparency issue and puts it on the agenda. But it can also discourage corporates from being open. It dramatises the unpredictable trapdoors on which they may be standing.

The concept of a statement of tax strategy is, as George Bull, senior tax partner at accountancy firm RSM, points out, ‘very laudable’. But at this stage of its development it is fraught with difficulty. 

For one thing, not all OECD countries have anything like the culture of corporate disclosure and detail that is happily second nature in a post-Cadbury Report Britain. There will be the traditional concerns over giving away competitive advantage and about how far to go into detailed specifics. It looks like we are in a process in which companies provide disclosure; regulators then ask for more detail; companies provide more; and gradually a shape of what the most useful tax disclosure looks like emerges.  

More than one way to skin a cat

And then there is the issue of what sort of tax. Public outrage has tended to focus on corporate tax. But that is in decline. Governments, quite sensibly, feel that corporate tax cuts attract companies, which then pay huge sums in the form of employment taxes, income taxes, VAT and so on. 

As you might expect, the PwC survey reveals a solid 38% of FTSE 100 companies seeking to demonstrate this by disclosing their ‘total tax contribution’. The idea is that such figures improve understanding and increase visibility of the size of their overall contribution to public finances.

Tax transparency is likely to evolve over the coming years much as remuneration disclosure has over the past decade. Annual reports are now full of pages of dense, if not totally impenetrable, remuneration detail. The evolution has been slow, with a lurch forward at each occasional cause célèbre. ‘Ten or 20 years down the line, tax disclosures could be as voluminous as remuneration,’ says Bull, ‘but only acted on in exceptional cases rather than routinely.’

It will be a difficult task. And it will depend as much on the public coming to understand the complexities of different taxes, their different contributions to the government’s revenue pot, and the sometimes unintended consequences of the bees in a politician’s bonnet as it does on the ability of companies to articulate what they have done. But the onus is on companies. They are the players with the most to lose, but also the ones with the knowledge, information and disclosure that can make the idea work.

Robert Bruce is an accountancy commentator and journalist