- The survey highlights that there is a significant shift towards tax transparency in Indian businesses, aligning with global ESG trends.
- 48% of businesses plan to do voluntary tax transparency in the next three years through disclosure of total tax contribution (TTC). This highlights the significance of tax transparency in promoting responsible corporate behaviour, stakeholder trust and sustainable development.
- 47% of respondents believe that a reputation of responsible tax behaviour is the primary driver for tax transparency, and improvement in ESG profile and score (44%) is the second most important factor for promoting tax transparency.
- This suggests that businesses in India understand the potential benefits of proactively sharing information about their tax transparency related practices and recognise the link between tax transparency and overall sustainability and societal responsibility, as tax is the largest societal contribution that companies make.
- 50% of Indian businesses surveyed have made a net-zero commitment; of these, 48% aim to achieve this by 2030. This indicates that net-zero ambitions run high, indicating a sense of urgency and ambition among Indian businesses to address climate change and transition to a low-carbon economy.
- 67% of respondents stated the carbon taxes in various jurisdictions are likely to impact their supply chain, indicating concerns around the impact of carbon taxes on supply chains. As such, integrating holistic digitised carbon measurement systems across their value chain and transparency on taxes paid across various jurisdictions can mitigate risks and help companies capitalise on the opportunities associated with evolving carbon tax frameworks.
- 93% of respondents believe tax incentives are relevant/very relevant for the adoption of ESG practices. Notably, 86% of businesses would like to allocate tax incentives towards preservation of the environment. Additionally, the survey results show that there is also significant interest in using tax incentives for inclusion and diversity initiatives (54%) and addressing social vulnerability (37%).
New Delhi, 9 January 2024: In recent years, the global business landscape has witnessed a significant transformation in sustainable and responsible practices. As a core pillar of corporate strategy, companies are investing in sustainability and striving to communicate their intentions, commitments and achievements clearly to stakeholders. Conducted in India between April and July 2023, PwC India’s Tax transparency in ESG: Insights into Indian businesses and their sustainable practices survey offers a thorough analysis of the current state of tax transparency in Indian businesses, underscoring its vital role within the broader scope of environmental, social and governance (ESG) principles.
Based on insights shared by ~250 senior executives across a variety of industries in India, the report provides an extensive overview of how businesses are aligning with global ESG trends, with a particular focus on tax transparency. The report highlights that out of the 50% respondents who have made a net-zero commitment, 48% aim to achieve their goals by 2030, and are therefore poised to undertake decarbonisation measures at an accelerated pace.
Nearly 60% state that there is a need to incentivise ESG interventions. The insights reflect that with incentives and policy interventions, governments can support businesses in achieving their decarbonisation commitments, addressing income inequality, and promoting diversity and inclusion, underpinning essential elements of ESG transformation for businesses.
A key finding of the survey is that 43% of companies surveyed consider total tax contribution (TTC) as a crucial aspect of tax transparency. This demonstrates a growing awareness among Indian businesses about the importance of transparent tax practices in fostering trust and creating positive public perception. Additionally, nearly half of the respondents (47%) acknowledge the significance of a well-defined tax strategy, indicating a shift toward more responsible tax practices in line with regulatory requirements.
However, the report also highlights a considerable gap in the implementation of tax transparency practices, with 75% of businesses not publishing their Tax Transparency Reports (TTRs) currently. Despite this, there is a clear trend of growing recognition among businesses of the need to adopt such practices. Moreover, the survey indicates that only 23% of Indian companies currently use the GRI 207: Tax standard in their tax transparency-related reporting, pointing to the limited adoption of international reporting standards but also identifying an area with significant potential for growth
Looking ahead, the survey suggests an increasing trend towards more comprehensive and voluntary adoption of tax disclosures in the coming years. This aligns with global practices and the evolving expectations of stakeholders. Such transparency in tax matters is not only critical for businesses to demonstrate their commitment to responsible corporate behaviour but also for the overall integrity of the tax system.
Sambitosh Mohapatra, ESG Leader, PwC India, commented, “The intrinsic link between tax transparency and ESG principles is becoming evident. Indian businesses are recognising the importance of integrating tax considerations into their sustainability strategies, demonstrating a commitment to responsible corporate conduct and societal contribution.”
The report also underscores the importance of policy interventions to incentivise ESG practices, emphasising the role of coordinated measures combining green taxes and incentives in achieving India’s climate goals.
“Our survey brings to light the evolving nature of tax transparency in the ESG framework, reflecting a pivotal shift in corporate India. The need to adopt transparent tax practices and effectively communicate tax narratives is key to building trust with stakeholders and aligned with pioneering efforts around India’s climate ambitions. Embracing these practices demonstrates a commitment to ethical business operations and can significantly enhance a company's reputation in the eyes of investors, customers and the broader community,” Sambitosh added.
PwC India’s report serves as a valuable resource for businesses, policymakers and stakeholders, offering insights into the dynamics of tax transparency and its increasing relevance in today’s sustainable business environment.
About the survey
The report is based on a market survey of nearly 250 tax heads, sustainability/ESG leaders, CFOs and CXOs of Indian businesses, spanning industries such as financial services, technology, media, and telecom (TMT), retail and consumer, pharmaceuticals and life sciences, and hard-to-abate sectors such as metals and mining, automotive, transportation, logistics, chemical and petrochemicals, and engineering and construction,among others. The purpose of this survey was to gather insights into how Indian businesses are weaving tax considerations into their overarching ESG framework and to assess the awareness and perception regarding this crucial aspect. The survey further delves into various facets, encompassing respondents' net-zero commitments, the strategies employed to attain these commitments, the impact of carbon taxes on their supply chains, and the policy interventions deemed vital for the implementation of robust ESG practices.
About PwC
At PwC, our purpose is to build trust in society and solve important problems. We’re a network of firms in 151 countries with over 360,000 people who are committed to delivering quality in assurance, advisory and tax services. Find out more and tell us what matters to you by visiting us at www.pwc.com.
PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. Please see www.pwc.com/structure for further details.
© 2023 PwC. All rights reserved. text.
Contact us
