GACA3: How to publish a tax policy and country-by-country reporting

Modified on Mon, 10 Aug at 12:08 PM

What is the intent of GACA3?

The United Nations Tax for Sustainable Development Goals Initiative recognizes that taxes play a crucial role in financing the Sustainable Development Goals (SDGs). Taxes reduce the need for international aid, support the repayment of national debt, and strengthen a country’s ability to withstand external economic shocks.

In response to stakeholders calling for greater tax transparency, global organizations like the Organization for Economic Cooperation and Development (OECD), Global Reporting Initiative (GRI), and B Team have published standards and best practices for tax governance and reporting. GACA3 conceptually aligns with these resources.

GACA3 requires XXL companies to publish both their tax policy and their country-by-country report.

What is GACA3, and when does it apply?

GACA3.1 requires companies to publish their tax policy, which includes criteria on governance, control, and stakeholder engagement. The company’s highest governing body approves the tax policy.

GACA3.2 requires companies to annually publish their country-by-country report, which reports financial information (including taxes paid) for each of the company’s tax jurisdictions. The company’s highest governing body oversees the country-by-country report.

GACA3 only applies to XXL companies. GACA3.1 applies in Year 0; GACA3.2 applies in Year 3.

How can my company publish a tax policy for GACA3.1?

To meet GACA3.1, your company publishes on its website a tax policy that meets the criteria listed below. Your company’s highest governing body approves the tax policy.

The tax policy includes:

Your company’s approach to responsible taxes
- How taxes link to your company’s business and sustainable development strategies
- How your company ensures regulatory compliance
- Who reviews and approves the tax policy
The tax policy’s governance, control, and risk management
- Who is accountable for enforcing the tax policy
- How your company implements the policy (e.g. trainings)
- How your company identifies and manages non-compliances
- How your company ensures compliance with the governance and control framework (i.e. the three bullets above)
- How stakeholders can raise concerns about the company’s tax practices (links to PSG3 on the company’s grievance procedure)
- Your company’s assurance process for tax reporting
Your company’s stakeholder engagement related to taxes
- How your company engages with authorities
- How your company engages in public policy advocacy
- How your company considers stakeholders’ concerns

How can my company publish a country-by-country report for GACA3.2?

To meet GACA3.2, your company publishes on its website a country-by-country report that meets the criteria listed below. Your company’s highest governing body oversees the country-by-country report.

The report includes:

All tax jurisdictions where your company is resident for tax purposes
For each tax jurisdiction, your company includes the financial data listed below (equivalent to GRI 207-4):
- The names of the resident entities
- The company’s primary activities
- The number of employees, and how it was calculated
- Revenue from third-party sales
- Revenue from intra-group transactions with other tax jurisdictions
- Profit or loss before tax
- Tangible assets, other than cash and cash equivalents
- The amount of corporate income tax paid on a cash basis
- The amount of corporate income tax accrued on profit or loss
- The reasons for any difference between corporate income tax accrued on profit or loss and the tax due, if the statutory tax rate is applied to profit or loss before tax

What evidence does my company need to upload in B Impact?

For GACA 3.1, follow the steps below.

Link to your company’s tax policy published on your website.
Provide evidence (e.g. meeting minutes) that your company’s highest governing body has approved the policy.

For GACA 3.2, follow the steps below.

Link to your company’s country-by-country report published on your website.
Provide evidence (e.g. meeting minutes) that your company’s highest governing body oversees the report.

How does GACA3 align with regulations and best practices?

GACA3 represents conceptual alignment data points with global organizations’ standards and best practices, including the OECD Base Erosion and Profit Shifting (BEPS), GRI Tax Standard, and B Team Responsible Tax Principles.

Regulatory frameworks

GACA3.2 conceptually aligns with regulatory frameworks such as the OECD BEPS Action 13 and the European Union (E.U.) public country-by-country reporting.

OECD BEPS equips governments with rules to address tax avoidance, ensuring that profits are taxed where economic value is created. Under BEPS Action 13, all large multinational companies are required to prepare a country-by-country report with data on income, profit, taxes paid, and economic activity. Over 140 countries and jurisdictions are collaborating to mitigate tax avoidance and ensure a more transparent tax environment.

The E.U. public country-by-country reporting requires multinational companies to disclose where they generate their profits and where they pay their taxes. These additional transparency requirements apply to any multinational company, whether European or not, that is significantly active in the E.U.

GRI Tax Standard

GACA3.1 conceptually aligns with GRI 207-1 (approach to tax), GRI 207-2 (tax governance, control, and risk management), and GRI 207-3 (stakeholder engagement). GACA3.2 conceptually aligns with GRI 207-4 (country by country reporting).

The GRI Tax Standard represents a global benchmark for tax transparency. It encourages companies to publicly disclose their tax policy as well as their tax payments on a country-by-country basis. Today, one in four of the largest public companies globally use the GRI Tax Standard in their sustainability reports. Key stakeholder groups such as the United Nations and the E.U. reference the standard in their frameworks and regulations.

B Team Responsible Tax Principles

GACA3.1 conceptually aligns with the B Team Responsible Tax Principle 1 (accountability and governance), Principle 2 (compliance), Principle 4 (relationships with tax authorities), and Principle 6 (supporting effective tax systems). GACA3.2 conceptually aligns with Principle 7 (transparency).

The B Team is a global collective of business and civil society leaders working to create new norms for corporate leadership. The B Team Responsible Tax Principles cover three main areas: an approach to tax management, relationships with others, and reporting to stakeholders. The principles were developed by a multi-stakeholder coalition of companies, civil society, institutional investors, and international institution representatives. Signatories of the principles pledge their contribution to more responsible, principled, and transparent corporate practices.