1.1 The reporting organization shall report how it manages tax using Disclosure 3-3 in GRI 3: Material Topics 2021.

The reporting organization shall report the following information:

1. A description of the approach to tax, including:
   1. whether the organization has a tax strategy and, if so, a link to this strategy if publicly available;
   2. the governance body or executive-level position within the organization that formally reviews and approves the tax strategy, and the frequency of this review;
   3. the approach to regulatory compliance;
   4. how the approach to tax is linked to the business and sustainable development strategies of the organization.

Background
An organization’s approach to tax defines how the organization balances tax compliance with business activities and ethical, societal, and sustainable development-related expectations. It can include the organization’s tax principles, its attitude to tax planning, the degree of risk the organization is willing to accept, and the organization’s approach to engaging with tax authorities.

An organization’s approach to tax is often described in a tax strategy, but it could also be described in equivalent documents, such as policies, standards, principles, or codes of conduct.

Guidance for Disclosure 207-1-a
The reporting organization can illustrate its approach to tax by providing examples drawn from its tax practices. For example, the organization can provide an overview of its use of tax havens, the types of tax incentive it uses, or its approach to transfer pricing. These examples help demonstrate the organization’s risk appetite and the tax practices deemed acceptable and unacceptable by the organization and its highest governance body.

Guidance for Disclosure 207-1-a-i
If the organization has a tax strategy but the strategy is not publicly available, the organization can provide an abstract or summary of the strategy.

If the organization has a tax strategy that applies to a smaller number of entities or tax jurisdictions than reported in Disclosure 207-4, the organization may report this strategy and list the entities or tax jurisdictions to which the strategy applies.

In addition to the overall strategy, if the organization has tax strategies that apply to individual entities or tax jurisdictions, the organization can explain any relevant differences between these strategies.

Guidance for Disclosure 207-1-a-iii
When describing its approach to regulatory compliance, the organization can describe any statements in its tax strategy or equivalent documents regarding its intention with respect to the tax laws in the jurisdictions in which it operates. For example, the organization can describe whether it seeks to comply with the letter and the spirit of the law. That is, whether the organization takes reasonable steps to determine and follow the intention of the legislature.²

Guidance for Disclosure 207-1-a-iv
When describing how its approach to tax is linked to its business strategy, the organization can explain how its tax planning is aligned with its commercial activities. The description can include any relevant statements from its tax strategy or equivalent documents.

When describing how its approach to tax is linked to its sustainable development strategy, the organization can explain the following:

• Whether it considered the economic and social impacts of its approach to tax when developing its tax strategy.
• Any organizational commitments to sustainable development in the jurisdictions in which it operates and whether its approach to tax is aligned with these commitments.

The reporting organization shall report the following information:

1. A description of the tax governance and control framework, including:
   1. the governance body or executive-level position within the organization accountable for compliance with the tax strategy;
   2. how the approach to tax is embedded within the organization;
   3. the approach to tax risks, including how risks are identified, managed, and monitored;
   4. how compliance with the tax governance and control framework is evaluated.
2. A description of the mechanisms to raise concerns about the organization’s business conduct and the organization’s integrity in relation to tax.
3. A description of the assurance process for disclosures on tax including, if applicable, a link or reference to the external assurance report(s) or assurance statement(s).

Background
Having robust governance, control, and risk management systems in place for tax can be an indication that the reported approach to tax and tax strategy are well embedded in an organization and that the organization is effectively monitoring its compliance obligations. Reporting this information reassures stakeholders that the organization’s practices reflect the statements it has made about its approach to tax in its tax strategy or equivalent documents.

Guidance for Disclosure 207-2-a
When describing the tax governance and control framework, the reporting organization can provide examples of effective implementation of its tax governance, control, and risk management systems.

Guidance for Disclosure 207-2-a-i
If the highest governance body in an organization is accountable for compliance with the tax strategy, the organization can specify the degree to which the highest governance body has oversight of compliance. The organization can also specify any accountability for compliance delegated to executive-level positions within the organization.

Guidance for Disclosure 207-2-a-ii
When reporting how the approach to tax is embedded within the organization, the organization can describe processes, projects, programs, and initiatives that support adherence to the approach to tax and tax strategy.

Examples of such initiatives can include:

• training and guidance provided to relevant employees on the link between tax strategy, business strategy, and sustainable development;
• remuneration or incentive schemes for the person(s) responsible for implementing the tax strategy;
• succession-planning for positions within the organization that are responsible for tax;
• participation in tax transparency initiatives or representative associations that seek to develop best practice around disclosures on tax or educate stakeholders on tax-related issues.

Guidance for Disclosure 207-2-a-iii
Tax risks are risks associated with the organization’s tax practices that might lead to a negative effect on the goals of the organization, or to financial or reputational damage. These include compliance risks or risks such as those related to uncertain tax positions, changes in legislation, or a perception of aggressive tax practices.

When reporting on the approach to tax risks, the organization can describe its risk appetite and tolerance and provide examples of tax practices it has avoided because they are misaligned with its approach to tax and tax strategy. Risk appetite and tolerance indicate the degree of risk the organization is willing to accept in determining its tax positions.

When reporting how tax risks are identified, managed, and monitored, the organization can:

• describe the role of the highest governance body in the tax risk management process;
• describe how the tax risk management process is communicated and embedded across the organization;
• refer to any internal control frameworks or generally accepted risk management principles that are applied to tax.

Guidance for Disclosure 207-2-a-iv
When reporting how compliance with the tax governance and control framework is evaluated, the organization can describe the process through which the tax governance and control framework is monitored, tested, and maintained. An example of this is giving an internal auditor accountability for undertaking annual reviews of the tax department’s compliance with the tax governance and control framework.

The organization can also specify the degree to which the highest governance body has oversight of the design, implementation, and effectiveness of the tax governance and control framework.

Guidance for Disclosure 207-2-b
One example of a mechanism for individuals to raise concerns about the organization’s business conduct, or about activities that compromise the organization’s integrity in relation to tax, is whistleblowing.

Disclosure 207-2-b is related to Disclosure 2-26 in GRI 2: General Disclosures 2021. If the information reported by the organization in Disclosure 2-26 covers mechanisms used to raise concerns about the organization’s business conduct in relation to tax, the organization can provide a reference to this information.

Guidance for Disclosure 207-2-c
Disclosure 207-2-c is related to Disclosure 2-5 in GRI 2: General Disclosures 2021. If the assurance process for disclosures on tax has been completed as part of another assurance process, the organization can provide a reference to this information reported in Disclosure 2-5 or elsewhere.

The reporting organization shall report the following information:

1. A description of the approach to stakeholder engagement and management of stakeholder concerns related to tax, including:
   1. the approach to engagement with tax authorities;
   2. the approach to public policy advocacy on tax;
   3. the processes for collecting and considering the views and concerns of stakeholders, including external stakeholders.

Background
Organizations’ tax practices are of interest to various stakeholders. The approach an organization takes to engaging with stakeholders has the potential to influence its reputation and position of trust. This includes how the organization engages with tax authorities in the development of tax systems, legislation, and administration.

Stakeholder engagement can enable the organization to understand evolving expectations related to tax. It can give the organization insight into potential future regulatory changes and enable the organization to better manage its risks and impacts.

Guidance for Disclosure 207-3-a-i
The approach to engagement with tax authorities can include participating in cooperative compliance agreements, seeking active real-time audit, seeking clearance for all significant transactions, engaging on tax risks, and seeking advance pricing agreements.

Guidance for Disclosure 207-3-a-ii
When reporting the approach to public policy advocacy on tax, the reporting organization can describe:

• its lobbying activities related to tax;
• its stance on significant issues related to tax that it addresses in its public policy advocacy, and any differences between its advocacy positions and its stated policies, goals, or other public positions;
• whether it is a member of, or contributes to, any representative associations or committees that participate in public policy advocacy on tax, including:
  • the nature of this contribution;
  • any differences between the organization’s stated policies, goals, or other public positions on significant issues related to tax, and the positions of the representative associations or committees.

Disclosure 207-3-a-ii is related to the requirements in GRI 415: Public Policy 2016. If the organization has determined public policy to be a material topic and has reported information in GRI 415 that covers the organization’s public policy advocacy on tax, the organization can provide a reference to this information.

Guidance for Disclosure 207-3-a-iii
When reporting the processes for collecting and considering the views and concerns of stakeholders, the organization can describe how the processes enable stakeholders to participate in this engagement. The organization can also provide examples of how stakeholder feedback has influenced the approach to tax, the tax strategy, or the tax practices of the organization.

The reporting organization shall report the following information:

1. All tax jurisdictions where the entities included in the organization’s audited consolidated financial statements, or in the financial information filed on public record, are resident for tax purposes.
2. For each tax jurisdiction reported in Disclosure 207-4-a:
   1. Names of the resident entities;
   2. Primary activities of the organization;
   3. Number of employees, and the basis of calculation of this number;
   4. Revenues from third-party sales;
   5. Revenues from intra-group transactions with other tax jurisdictions;
   6. Profit/loss before tax;
   7. Tangible assets other than cash and cash equivalents;
   8. Corporate income tax paid on a cash basis;
   9. Corporate income tax accrued on profit/loss;
   10. Reasons for the difference between corporate income tax accrued on profit/loss and the tax due if the statutory tax rate is applied to profit/loss before tax.
3. The time period covered by the information reported in Disclosure 207-4.

Compilation requirements

2.1 When compiling the information specified in Disclosure 207-4, the reporting organization shall report information for the time period covered by the most recent audited consolidated financial statements or financial information filed on public record. If information is not available for this time period, the organization may report information for the time period covered by the audited consolidated financial statements, or the financial information filed on public record, immediately preceding the most recent ones.

2.2 When compiling the information specified in Disclosure 207-4-b, the reporting organization shall:

2.2.1 reconcile the data reported for Disclosures 207-4-b-iv, vi, vii, and viii with the data stated in its audited consolidated financial statements, or the financial information filed on public record, for the time period reported in Disclosure 207-4-c. Where the data reported does not reconcile with the audited consolidated financial statements, or the financial information filed on public record, the organization shall provide an explanation for this difference;

2.2.2 for Disclosure 207-4-b-ix, include corporate income tax accrued in the time period reported in Disclosure 207-4-c and exclude deferred corporate income tax and provisions for uncertain tax positions;

2.2.3 in cases where an entity is deemed not to be resident in any tax jurisdiction, provide the information for this stateless entity separately.

2.3 The reporting organization should report the following additional information for each tax jurisdiction reported in Disclosure 207-4-a:

2.3.1 Total employee remuneration;

2.3.2 Taxes withheld and paid on behalf of employees;

2.3.3 Taxes collected from customers on behalf of a tax authority;

2.3.4 Industry-related and other taxes or payments to governments;

2.3.5 Significant uncertain tax positions;

2.3.6 Balance of intra-company debt held by entities in the tax jurisdiction, and the basis of calculation of the interest rate paid on the debt.

Background
Country-by-country reporting is the reporting of financial, economic, and tax-related information for each jurisdiction in which the organization operates.

Guidance for Disclosure 207-4-a
In the context of this Standard, tax jurisdictions are identified according to where the entities included in the organization’s audited consolidated financial statements, or in the financial information filed on public record, are resident for tax purposes. These entities include permanent establishments and dormant entities.

Guidance for Disclosure 207-4-b
Unless otherwise stated, country-by-country information is to be reported at the level of tax jurisdictions and not at the level of individual entities.

Number of employees, revenues, profit/loss before tax, and tangible assets other than cash and cash equivalents are indicators of the organization’s scale of activity within a tax jurisdiction. When considered in conjunction with the other required and recommended information, they can inform assessments about the level of taxes being paid in a jurisdiction.

In addition to this information, the organization can report any other information relevant for understanding the scale of its activity within a jurisdiction.

If the reporting organization cannot report all required information for all the tax jurisdictions reported in Disclosure 207-4-a, it may use reasons for omission as set out in GRI 1: Foundation 2021. The organization is required to specify the requirement it cannot comply with, and to provide a reason for omission and required explanation, as set out in GRI 1. See Requirement 6 in GRI 1 for more information on reasons for omission.

If complete reporting for a tax jurisdiction is not possible because the organization holds a minority shareholding or is the non-operating joint venture partner in an entity, the organization may provide ‘information unavailable / incomplete’ as the reason for omission and specify the majority shareholder or operating partner.

The organization can also report any contextual information necessary to understand how data has been compiled, such as any standards, methodologies, and assumptions used.

Guidance for Disclosure 207-4-b-i
Disclosure 207-4-b-i requires the organization to report a list of entities by tax jurisdiction.

If the organization’s publicly available audited consolidated financial statements, or the financial information filed on public record, include a list of all its entities by tax jurisdiction, the organization can provide a reference to this information.

When reporting the names of the resident entities for a tax jurisdiction, the organization can specify if any of the entities are dormant.

Guidance for Disclosure 207-4-b-ii
When reporting its primary activities in a tax jurisdiction, the organization can provide a general description such that a report reader can clearly identify the organization’s main activities in the jurisdiction, for example, sales, marketing, manufacturing, or distribution. The organization is not required to list the activities of each entity in the jurisdiction.

Guidance for Disclosure 207-4-b-iii
Employee numbers can be reported using an appropriate calculation, such as head count at the end of the time period reported in Disclosure 207-4-c or a full-time equivalent (FTE) calculation. To enable comparability, it is important that the organization applies the approach consistently across all tax jurisdictions and between time periods.

If the organization is unable to report exact figures, it can report the number of employees to the nearest ten or, where the number of employees is greater than 1000, to the nearest 100.

The number of employees is one indicator of the organization’s scale of activity in a tax jurisdiction. In addition to the number of employees, the organization may report the number of workers (excluding employees) performing the organization’s activities, if this helps explain the organization’s scale of activity in the jurisdiction. It is important that the organization reports the number of employees and/or the number of workers consistently across all jurisdictions and between time periods.

Guidance for Disclosures 207-4-b-iv and 207-4-b-v
These disclosures require the organization to report revenues from third-party sales for each tax jurisdiction and from intra-group transactions between that jurisdiction and other tax jurisdictions. Intra-group transactions within the same tax jurisdiction are not required, but the organization can report this information separately.

Intra-group transactions between jurisdictions can influence the tax bases of the organization in the jurisdictions involved in these transactions. Intra-group transactions within the same tax jurisdiction do not affect the tax base of the organization within that jurisdiction.

For this reason, revenues from third-party sales and intra-group transactions with other jurisdictions are a more appropriate indicator of an organization’s scale of activity in a tax jurisdiction than aggregated revenues. Aggregated revenues could result in local revenues being double-counted, which might create a misleading impression about the organization's scale of activity in a jurisdiction.

The organization can also report other sources of revenue, for example, dividends, interest, and royalties, where this is standard practice in the sector of the organization.

Guidance for Disclosure 207-4-b-vi
When reporting profit/loss before tax for a tax jurisdiction, the organization can calculate the consolidated profit/loss before tax for all its resident entities in the jurisdiction.

Guidance for Disclosure 207-4-b-vii
When reporting tangible assets for a tax jurisdiction, the organization can calculate the consolidated total of the net book values of tangible assets for all its resident entities in the jurisdiction.

Guidance for Disclosure 207-4-b-viii
When reporting corporate income tax paid on a cash basis for a tax jurisdiction, the organization can calculate the total actual corporate income tax paid during the time period reported in Disclosure 207-4-c by all its resident entities in the jurisdiction. This includes cash taxes paid by entities to the jurisdiction of residence and to all other jurisdictions (e.g., withholding taxes incurred in other tax jurisdictions).

If the tax paid includes a significant amount of withholding tax, the organization can explain this. If taxes are incurred in other tax jurisdictions, the organization can report the amount of tax paid to the other tax jurisdictions separately and identify the jurisdictions where the tax was paid.

Guidance for Disclosure 207-4-b-x
When reporting the reasons for the difference between corporate income tax accrued on profit/loss and the tax due if the statutory tax rate is applied to profit/loss before tax, the organization can describe items that explain the difference, such as tax reliefs, allowances, incentives, or any special tax provisions where an entity benefits from preferential tax treatment.

The organization can group explanatory items into a generic category, such as ‘other’, if these items together do not exceed 10% of the difference.

The organization can also report the expiration date, investment requirements, and likely long-term continuity of tax reliefs or incentives for a jurisdiction.

In addition to providing a qualitative explanation as required by this disclosure, the organization can also report a quantitative corporate tax reconciliation.

Guidance for Disclosure 207-4-c and clause 2.1
The organization is required to report information on a regular schedule and make it available in time for information users to make decisions (see the Timeliness principle in GRI 1: Foundation 2021 for more information). The organization is also recommended to report the information for the same reporting period and publish the information at the same time as its financial reporting, where this is possible (see section 5.1 in GRI 1 for more information). However, the information required in Disclosure 207-4 might not be available for reporting until a later point in time.

If the information required in Disclosure 207-4 is not available for the time period covered by the most recent audited consolidated financial statements or financial information filed on public record, the organization may report information for the time period covered by the audited consolidated financial statements, or the financial information filed on public record, immediately preceding the most recent ones.

Where this time period differs from the reporting period, the organization can specify the reason why.

Guidance for clause 2.2.1
For each of the disclosures specified in clause 2.2.1, the data is considered to be reconciled when the sum of this data for all tax jurisdictions equals the amount reported in the organization’s audited consolidated financial statements or in the financial information filed on public record.

Guidance for clause 2.2.3
When providing information for stateless entities, the organization can also include their jurisdiction of incorporation.

Guidance for clause 2.3.1
Total employee remuneration in a tax jurisdiction can reflect the business value provided by the entities in that jurisdiction to the organization as a whole.

Total employee remuneration also represents the basis for calculating taxes withheld and paid on behalf of employees, covered under clause 2.3.2.

Guidance for clause 2.3.2
Taxes withheld and paid on behalf of employees refer to taxes withheld by the organization from employee remuneration to be paid to the tax authorities. These can include income taxes, payroll taxes, and social security contributions.

Guidance for clause 2.3.3
Taxes collected from customers refer to taxes and duties charged on and collected on the sales of certain products and services. These are paid by the organization to the tax authorities on behalf of customers.

Guidance for clause 2.3.4
Examples of industry-related and other taxes or payments to governments include:

• industry taxes (e.g., energy tax, airline tax);
• property taxes (e.g., land tax);
• product taxes (e.g., customs duties, alcohol and tobacco duties);
• taxes and duties levied on the supply, use, or consumption of goods and services considered to be harmful to the environment (e.g., vehicle excise duties).

Guidance for clause 2.3.5
When reporting significant uncertain tax positions for a tax jurisdiction, the organization can report the value of the tax positions in line with its audited consolidated financial statements or the financial information filed on public record.

The organization can provide a description of tax positions that have not been agreed with the relevant tax authorities at the end of the time period reported in Disclosure 207-4-c. The description can include the nature of the disagreement and the reasons for any change in tax positions that occurred during the time period, where relevant.