- ESG tax reporting refers to the practice of companies disclosing information about their environmental, social, and governance (ESG) activities and their tax planning policies.
- It is no longer just a matter of basic compliance, but is now considered an important aspect of corporate governance.
- While some jurisdictions have implemented strict laws on ESG reporting, there are also voluntary standards and reporting systems available for companies to adopt.
- In Malta, there are both mandatory and voluntary ESG tax reporting requirements.
- Mandatory reporting includes country-by-country reporting, which aims to prevent aggressive tax planning and profit shifting.
- This requires multinational companies to provide comprehensive information on their group structures and the allocation of income and taxes in different jurisdictions.
- Failure to comply with these reporting requirements can result in penalties. In addition to mandatory reporting, there are also voluntary reporting standards such as the GRI 207 standard, which sets out requirements for organizations to report on their tax approach, governance, and stakeholder engagement. Implementing these voluntary standards can contribute to increased transparency for stakeholders and the public.
- Going forward, country-by-country reporting will not only be available to tax authorities but also publicly disclosed by large multinational companies.
- It is expected that Malta will adopt this requirement in the near future.
Source Times of Malta
