What Does Transparency Mean for Tax?
In a talk at the 2018 IFBM Conference Professor Penelope Tuck, Birmingham University Business School, examined the role financial reporting plays in response to calls for increased transparency about the tax affairs of multinationals.
Tax transparency is on the political agenda – with scandals like the Panama Papers and Paradise Papers making headline news. There are calls for more transparency in the hope that this can combat these issues – but is transparency the solution for tax avoidance? Tuck’s paper examines and compares public and private disclosure requirements, emphasising how not only disclosure but also clarity and accuracy are essential to mitigating tax avoidance.
While transparency is a laudable aim, simply increasing the amount of information can create a heavy compliance burden while burying effective disclosure under an information overload. Tuck concludes that transparency is not the same as visibility, and transparency without visibility might have unintended consequences. Here at XBRL International we have to agree – for disclosure to be effective it must also be comparable, discoverable and digital. #meaningmatters
Watch Tuck’s talk here.