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Increased Transparency with Country-by-Country Reporting and GRI 207

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In 2017, the Swedish Parliament adopted the government's legislative proposal regarding documentation for submitting country-by-country reporting to the Swedish Tax Agency. However, new regulations are now being introduced that require certain parts of this information to be made public. This article compares the current and upcoming rules on country-by-country reporting with the information that should be included in accordance with the global sustainability standard GRI 207-4.

Public Country-by-Country Reporting

The EU directive on public country-by-country reporting, which covers multinational companies, was approved and came into force in 2021. This means that companies must disclose information about paid income taxes and other related information, such as profits and the number of employees, specified by the country where they operate.

The directive must be incorporated into national legislation and will apply to fiscal years starting after May 31, 2024. For companies that follow the calendar year, this means that the first reporting will apply to the year 2025, with publication no later than the end of 2026. The rules affect groups with revenues over 8 billion Swedish kronor and include both EU-based and non-EU-based companies that have operations in the EU. The reporting should describe the business in each EU country and in jurisdictions that the EU considers non-cooperative, while other countries can be reported collectively.

Reporting According to GRI 207

GRI 207 is a standard which is part of the GRI Sustainability Reporting Standards (GRI Standards). The standards are designed to be used by organizations to report on their impact on the economy, environment, and society. The purpose of the GRI Standards is to reflect global best practices for sustainability reporting, which should help organizations around the world respond to new information requirements from stakeholders and regulatory authorities.

Furthermore, the GRI Standards address topics within taxation, designed to help organizations understand and communicate their tax strategy, and to report their revenues, taxes, and business activities on a country-by-country basis. GRI 207-4 includes information on country-by-country reporting, which informs about the data that should be reported.

Comparison of Current and Upcoming Rules and Recommendations

Below is a simplified comparison between the current rules on country-by-country reporting, the upcoming rules on public country-by-country reporting, and the information recommended to be included when reporting is made in accordance with GRI 207-4. Note that a detailed analysis regarding the differences between the various regulations is recommended before reporting takes place.


How shall the Country-by-Country Reporting be prepared to meet the increased requirements for public information?

1. Be certain of your data

The importance of country-by-country data has increased due to new rules for public reporting and the Pillar II framework. The accuracy of the information is crucial, and with increased demand for transparency, awareness of data interpretation must also be improved. It is important that not only tax managers and CFOs are informed, but also sustainability teams and boards should participate in the discussions. Companies should also consider automating data collection to streamline the process and standardize reporting. Finally, it is crucial to implement internal controls to verify and understand how it can be interpreted by external stakeholders.

2. Contradictions Against Already Publicly Available Data

Common to the reporting requirements is that they should include a description of the business, the number of employees, revenues, income tax, and accumulated income tax. Due to the increased requirements for information to be made public, it is important that groups explain and clarify any differences between audited annual reports and other publicly available information.

3. Show the Company's Total Tax Contribution

Tax issues are complex and a correct interpretation of public country-by-country reporting is crucial to avoid misunderstandings about a company's economic contribution. By integrating this reporting into the company's ESG strategy, in accordance with the GRI standards, companies can demonstrate their social responsibility. This can in turn lead to a better sustainability profile and ESG rating.
For further transparency, companies can provide a more complete picture of their tax contribution by reporting their Total Tax Contribution (TTC), which reflects the total tax contribution to society.

4. Comparison with Other Companies in Your Sector

Comparisons with competitors can provide insight into tax transparency and how other companies communicate their data. With increased demands on ESG (Environmental, Social, and Governance), it is important to see compliance with new directives as part of the company's overall tax strategy and ESG goals. It is also important to carefully consider how data from country-by-country reporting may be perceived.

Conclusion and Our Comments

In Sweden, the first public country-by-country report for groups with calendar year as the fiscal year will apply to the year 2025 and shall be published by December 31, 2026. However, it is important to note that some countries, such as Romania, have adopted these rules earlier.

In summary, to integrate tax transparency into your ESG strategy, consider publishing broader information about tax. This can improve the understanding of your company's contribution to society. Our specialist team at PwC can support organizations in the preparations and implementation of the new public CbCR directive, as well as the broader tax transparency strategy of groups to ensure that a consistently clear story about the business is presented.

Contact us

Amanda Ivansson & Evelina Dahlsjö

Amanda Ivansson & Evelina Dahlsjö

Amanda Ivansson and Evelina Dahlsjö works at PwC's Jönköping office within the area of Transfer Pricing, helping MNEs with transfer pricing reporting and compliance.

Amanda: +4610-212 52 21, amanda.ivansson@pwc.com
Evelina: +4610-212 77 66, evelina.dahlsjoe@pwc.com

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