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3. Country-by-Country ReportingWhat are the latest developments?
Building Public Trust Through Tax Reporting 2019
A series of five briefing papers exploring how companies are responding to the tax
transparency debate
What does Country-by-Country Reporting
(CbCR) mean?
CbCR is a term that is used broadly, but in simple terms
it means reporting on certain financial information
(e.g. revenue, profit, employees, assets, tax paid) on a
country basis rather than a global basis. Under OECD BEPS
Action 13, over 80 countries have passed legislation requiring
companies to disclose this information privately to tax
authorities, for use in risk assessment.
Public CbCR
There is a focus on public CbCR in four areas:
1. Sector specific initiatives
Sector specific initiatives already require a form of public
CbCR. The EU Accounting Directive1 requires mining and
forestry companies to report on the taxes, royalties and
bonuses that they pay worldwide. CRD IV2 requires credit
institutions and investment firms to publish certain tax and
financial data for each country where they operate.
2. EU public CbCR proposals
In April 2016, the European Commission put forward a
proposal for an initiative for large multinational companies to
report publicly on where their profits arise and where these
are taxed.
The purpose of the proposal was to increase transparency
and tackle tax avoidance within the EU. This was adopted by
the European Parliament in July 2017 and the proposal
moved to trilogue negotiations between the EU commission,
EU Parliament and the Council of Ministers. The proposal had
reached a deadlock in the Council of EU Member States, with
no movement until very recently.
In September 2019, the German Federal Finance Minister
(representing half of the German Coalition Government)
announced support for public CbCR. In October 2019, MEPs
adopted a resolution urging Member States to agree a
position to allow talks to begin.
The proposal is still being discussed in Council by the EU-28
Member States. It is currently unclear whether this will be
treated by the European Council as a tax issue (which would
require Council unanimity) or a legal and accounting issue
(which allows Council voting by means of a qualified majority).
Content of EU public CbCR proposals
3. GRI standard on Tax
The GRI sustainability reporting standards are widely
accepted global standards for sustainability reporting and
many companies state that they are GRI compliant. The GRI
has issued a standard on Tax3 which contains a requirement
for public CbCR. The standard obtained approval in
December 2019 and will be effective from January 2021.
Internal communication with teams responsible for
sustainability reporting is important. The content of the
standard is as follows:
Disclosure 207-4
The reporting organisation shall report the
following information:
a. All tax jurisdictions where the entities included in the
organisation’s audited consolidated financial statements,
or in the financial information filed on public record, are
resident for tax purposes.
b. For each tax jurisdiction reported in disclosure 207-4-a:
i. Names of the resident entities;
ii. Primary activities of the organisation;
iii. Number of employees, and the basis of calculation of
this number;
iv. Revenues from third-party sales;
v. Revenues from intra-group transactions with other
tax jurisdictions;
vi. Profit/loss before tax;
vii.Tangible assets other than cash and cash equivalents;
viii.Corporate income tax paid on a cash basis;
ix. Corporate income tax accrued on profit/loss;
x. Reasons for the difference between corporate income
tax accrued on profit/loss and the tax due if she
statutory tax rate is applied to profit/loss before tax.
c. The time period covered by the information reported in
Disclosure 207-4.
4. Voluntary reporting
Our latest review showed that six companies in the FTSE 100
have published some form of CbCR, containing a
geographical split of revenues, profit, employees and tax paid.
The most comprehensive of these is Vodafone4. The report
contains table 1 of Vodafone’s OECD BEPS filing together
with an explanation of why the disclosure is complex to
understand, for example double counting in the revenue line.
Vodafone also publish their own assessment of their
contribution to the public finances in different countries and a
business model to explain where revenue and tax arises.
The extracts in this document include the Vodafone
disclosures together with examples of Total Tax contribution
and Economic contribution disclosures that are used to
communicate the company’s broader contribution in taxes
and beyond.
Who is in
scope?
Undertakings with a consolidated net
turnover of EUR 750m or more
Level of
reporting for
operations in
Member States
Data to be reported on a
geographical basis for each Member
State (and certain jurisdictions which
are regarded as having inadequate
tax governance)
Level of
reporting for
operations
outside the EU
Aggregated level data (apart from
certain jurisdictions noted above)
Content of
template
Brief description of activities; number
of employees; net turnover; profit or
loss before tax; tax accrued
(excluding deferred tax and uncertain
tax positions) in the year; tax paid in
the year; accumulated earnings
Commercially
sensitive
information
To ensure fair competition,
commercially sensitive information
may be temporarily omitted if it is
seriously prejudicial to the commercial
position of the company
Availability Publicly available on the
company’s website
1. EU Accounting Directive, Chapter 10
2 Capital Requirements Directive IV – https://www.pwc.co.uk/tax/assets/a-practical-guide-to-
the-uk-regulations-cbcr-under-crd-iv.pdf
3 https://www.globalreporting.org/standards/media/2369/item_04_-
_final_version_of_gri_207_tax_2019.pdf
4. https://www.vodafone.com/content/dam/vodcom/sustainability/pdfs/vodafone_2018_tax.pdf
1
Areas to consider
Areas to consider PwC insight
Consistency of purpose and implementation
between regimes There are a number of different
CbCR regimes (EU Accounting Directive1, CRDIV2,
EITI3) each with a different purpose and data
requirement. In some cases, data requirements are
inconsistent between different countries reporting
under the same regime.
The assumption is often made that transparency is
‘a good thing’ but with different regimes and without
consistent analysis, there is a risk that transparency
leads to ‘data not information’.
Interpretation of data Even within one regime,
interpretation of data can be challenging.
A comparison of ratios, for example, profit per
employee, can be misleading, but more
sophisticated analysis is time consuming
and complex.
Many companies which have prepared their CbCR
data for submission to tax authorities have
developed answers to the queries that may be
raised. Some companies provide additional
voluntary information to provide further explanation
of their tax affairs in their countries of operation.
Consider how tax in relation to income, profit margin
and employees compares between your countries of
operation and other companies in your sector.
Commercial sensitivity For some companies,
release of public CbCR data could be commercially
sensitive, leading to financial loss, or affecting the
competitive position of a company.
An area that is still under debate – the EU public
CbCR proposal identifies commercial sensitivity as
a reason for excluding some CbCR data from the
public domain.
International consensus While all OECD and
many non-OECD countries have signed up to the
BEPS CbCR action point, there are diverse views
on public CbCR. In the UK, an amendment was
made to the 2016 Finance Bill, giving HMRC the
power to make regulations requiring OECD CbCR
disclosures to be made public although we
understand that the legislation will only be put into
effect when and if there is international agreement
on public CbCR. Some countries, however, are
understood to be opposed to public CbCR.
An area of debate which is challenging for a Head of
Tax, as different territories adopt different
approaches to CbCR and related transparency.
The focus on CbCR will continue in the future and we’ve outlined below some areas to consider as
companies develop their thinking in this area.
1. EU Accounting Directive, Chapter 10
2 Capital Requirements Directive IV – https://www.pwc.co.uk/tax/assets/a-practical-guide-to-the-uk-regulationscbcr-under-crd-iv.pdf
3. The Extractive Industries Transparency Initiative – https://eiti.org/
2
Extracts
Source:
1. https://www.vodafone.com/content/dam/vodcom/sustainability/pdfs/vodafone
_2018_tax.pdf
1For the first time this year Vodafone has published the Table 1 of the OECD BEPS CBCR as filed with the tax authorities at 31 March 2017. Vodafone
explain why the data is complex. They highlight that transactions between entities can be counted twice.
3
Extracts
Source:
2. https://www.unilever.com/Images/supporting-sustainable-development-through-our--tax-
contributions_tcm244-536541_en.pdf
3. https://www.bhp.com/-/media/documents/investors/annual-
reports/2019/bhpeconomiccontributionreport2019.pdf
2Unilever show how the Total Tax Contribution links to the Sustainable
Development Goals.3
BHP provide a diagram setting out their value chain and total economic
contribution arising from their business. They quantify the amounts paid
to government and also to suppliers, employees and shareholders,
investors and communities.
4
Extracts
4St James’s Place publish CbCR data together with footnotes to explain
the information.5
Barclays show global Total Tax Contribution, including taxes borne
and taxes collected. Their mandatory CRDIV disclosures (audited) are
supplemented with taxes paid data (unaudited).
Source:
4. https://www.sjp.co.uk/~/media/Files/S/SJP-Corp/document-library/reports-and-
presentation/2018/CBCR-tax-jurisdiction-2018.pdf
5. https://home.barclays/content/dam/home-barclays/documents/investor-relations/reports-
and-events/annual-reports/2018/barclays-country-snapshot-2018.pdf
5
Extracts
6Thames Water provide an infographic of their economic contribution,
qualifying the amounts paid to governments but also the amounts
invested in infrastructure and biodiversity projects.
7 Tesco set out their Total Tax Contribution by tax type.
Source:
6. https://www.thameswater.co.uk/-/media/Site-Content/Thames-
Water/Corporate/AboutUs/Investors/Our-Taxes-explained-2016-17.ashx
7. https://www.tescoplc.com/media/476392/total-tax-contribution-2019.pdf
6
Contacts
Andrew Packman
Total tax contribution and
tax transparency leader
T: + 44 (0)7712 666441
This content is for general information purposes only, and should not be used as a substitute for consultation with professional advisors.
© 2019 PricewaterhouseCoopers LLP. All rights reserved. PwC refers to the UK member firm, and may sometimes refer to the PwC
network. Each member firm is a separate legal entity. Please see www.pwc.com/structure for further details.
191119-135555-TO-OS
Questions to consider
1. How can you gain
comfort that your
global Total Tax
Contribution data
looks reasonable?
2. How does your
CbCR data compare
to your peers?
3. The focus of country-
by-country reporting is
on corporate income
tax but is there value in
highlighting your
broader contribution to
the economies where
you operate?
How can we help?Gain insights from Benchmarking
The PwC Total Tax Contribution Framework is a widely recognised and robust
methodology which enables companies to identify, collect, analyse and report all
taxes and contributions that they make to the public finances around the world.
It identifies a tax borne and a tax collected and is a well understood methodology
around the world. We can provide templates, answer queries, sense check data
and provide internal or external assurance.
Our CbCR analyser is able to compare your data to selected peers across a range
of ratios, providing insight into the how those ratios compare to your peers in
different countries.
A company’s contribution is broader than tax and extends to economic and social
contributions. Businesses are grappling with how to develop a more relevant way of
measuring their contribution to growth and the value they create and sustain their
licence to operate in the eyes of government and society. Companies have
difficulties in measuring their impact to the economy and society.
Our tax, economists and sustainability consultants can provide a holistic approach
to measuring the total impact. We aggregate the value of the impacts, consolidating
the tax, economic, social and environmental impacts into an overall value which can
be compared to other monetary costs.
Martin Kennedy
Transfer Pricing
T: +44 (0)7584 242614
Janet Kerr
Tax reporting and strategy
T: +44 (0)7841 781417
James Stone
Tax reporting and strategy
T: +44 (0)7841 073270
7
