The concept of enhanced tax transparency has risen in the corporate management agenda because companies are coming under increasing scrutiny by the public, the media, and governments.
Some insights from The Honourable John Manley on Total Tax Contribution:
Generally the only information available are the taxes on profits showing in the corporate financial statements. This does not encompass a business’s total payments to governments.
PwC has developed a framework to collect and report a company’s Total Tax Contribution (TTC) - a more complete measure of a company’s economic contribution to governments.
The TTC framework shows all cash taxes and other payments made to governments, and differentiates between business taxes borne by a company and those collected on behalf of the governments.
Quantification — take into account all cash taxes borne, as well as all cash taxes collected on behalf of governments. Taxes borne includes taxes on corporate profits, plus 4 other groupings of so-called fixed taxes that are payable whether the corporation makes a profit or not. Fixed taxes normally are not visible, but rather embedded with other expense groupings in the corporate financial statements.
Management — facilitates better management discussion and decision making about the totality of so-called fixed and profit taxes paid and collected, both domestic and foreign.
Transparency — provides robust data for enhanced external reporting in a company’s MD&A and CSR report, plus discussions with governments and other external interest groups.