The Global Reporting Initiative (GRI) has implemented a new tax standard for transparency reporting that affect multinational companies as from next year. In this article we describe the reporting obligations and what they mean for a multinational company.
GRI is an international independent standards organization that help businesses and organizations understand and be more transparent on issues such as environmental, economic, and social impacts. One of GRI reporting frameworks are the GRI Standards, which are used by multinational organizations in their sustainability reporting. The GRI Standards are divided in universal standards and topic-specific standards. The topic-specific standards are further divided in economic, environmental, and social topics. Each topic-specific standard includes disclosures that are designed to be used for that specific topic, together with the applicable universal standards.
The GRI 207: Tax Standard (GRI 207) is a new topic-specific standard which address taxes and is part of the series on economic topics. The GRI 207’s disclosures are designed to be used together with the universal standard GRI 103: Management Approach, which is used to report the management approach of specific topics, such as tax. GRI 207 is effective for reports or other material published on or after January 1, 2021.
GRI 207 includes the disclosures on management approach and a topic-specific disclosure. There are four disclosures in GRI 207.
- (207-1) report the approach to tax (four sub-sections i-iv).
- (207-2) report e.g. a description of the tax governance and control framework (paragraph a. includes four subsections i-iv, also paragraphs b and c).
- (207-3) report a description of the approach to stakeholder engagement and management of stakeholder concerns related to tax (three sub-section i-iii).
- (207-4) covers the country-by-country reporting which involves the reporting of the specific financial, economic and tax-related information for each jurisdiction in which a reporting organization operates (paras a, b (i-x) and c).
Reporting in accordance with the GRI 207 may not be that burdensome for a multinational company if the multinational company’s tax function is already acting in accordance with the tax related disclosures and have processes in place to gather all relevant tax-related data globally. A relevant question is naturally how each multinational company will or need to comply with the GRI 207 within the organization’s sustainability reporting. This is something that Blika has discussed with many multinational organizations. In these discussions we have found that the knowledges around this new standard and the approach vary for many reasons.
If you as Head of the Tax Function and Head of Sustainability have not started a discussion regarding if and how your group should manage this new Transparency Reporting initiative, that the time is now.
Blika provides a platform including a range of topic-specific tax solutions that support a multinational company in creating a robust governance, control, and tax risk management system. With the Blika tax solution a multinational company can manage and control that the organization’s tax strategy has been implemented globally, specific compliance obligations are fulfilled, and that the tax-related data is available for various tax reporting purposes.
If you, as a responsible person from the Tax Function or from the Sustainability Function of a multinational company, would like to know more about how Blika´s tax solutions could support you in your GRI 207 reporting, please contact us for a discussion.